Monday, February 24, 2014
The unexpected celebrity deaths of Philip Seymour Hoffman, James Gandolfini, and Heath Ledger impart some important estate planning lessons. Here are some key lessons from these celeb estates:
- Keep it private. Hoffman, Ledger, and Gandolfini all ended up with wills in probate. Avoid probate with a revocable trust, which disposes of assets outside of court.
- Include everyone. Don’t be like Hoffman and Ledger. Update wills and trusts after every birth.
- Consider marriage. Taxes devoured $15 million of Hoffman’s estate. If he had married Marianne O'Donnell, she would have received his whole estate tax-free.
- Taxes aren’t everything. You want to avoid taxes, but you first should want assets to go as you wish. Gandolfini wanted his sister to receive a large share of his estate, a move that made taxes inevitable.
- Make tax efficient transfers. Gandolfini’s teenage son received $7 million in life insurance proceeds. Use irrevocable life insurance trusts and other tax efficient transfers to avoid estate taxes.
- Consider age. Allowing children to receive significant assets when they are young, like Gandolfini’s baby daughter, may not be best for the child.
- Beware of foreign issues. Gandolfini had Italian property and Ledger was an Australian living in New York. Anyone with property or a presence in multiple countries should seek advice.
See Robert W. Wood, 7 Tips from Philip Seymour Hoffman, Gandolfini, & Other Celeb Estates, Forbes, Feb. 23, 2014.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.