Celebrities seem to have it all—fame and fortune. Unfortunately, some celebrities have a hard time planning for the division of their assets. They neglect to draft wills, fail to update them, or fail to make sure logistical details are handled correctly. A recent article highlights some high profile estate planning mistakes. It also explains how to avoid those mistakes.
The article provides examples of famous people who made mistakes that led to serious problems for their family members. For example:
- Jimi Hendrix. He died without a will. State law awarded his estate to his father, even though he was close to his brother. His brother received nothing.
- Florence “FloJo” Griffith Joyner. She wrote a will, but she did not tell anyone where it was. Her husband was unable to file it within the time period required by state law. This led to her husband and her mother going to court.
- Heath Ledger. He wrote a will, but he never updated it after the birth of his daughter. The will left everything to his parents and his sister.
- Michael Jackson. He created a trust, but he may have neglected to fully fund it. This led to a public fight between his family members.
Our Marietta, Georgia estate planning firm drafts and updates wills and estate plans for clients across the state of Georgia. Contact the Georgia estate planning attorneys at Georgia Family Law: Worrall Law LLC. Call us at 770.425.6060 or fill out an online contact form.
Three-time New York City Mayor Ed Koch died on Feb. 1, leaving an estate estimated between $10-$11 million. And it’s a good thing that “Hizzoner” loved governing, because one-quarter of his estate will be going to the state and federal governments.
During his tenure as Mayor, Koch was famous for asking people on the street, “How’m I doin’?” He would have been better served to ask that same question to a Family Estate Planning Lawyer before he passed on.
In his will, Koch bequeathed most of his assets to blood relatives – a sister and her husband, a sister-in-law, and three nephews – as well as to his secretary and a charity. And because Mayor Koch used a Will and didn’t put his assets in Trust, it’s all public. In fact, you can read the details of exactly what Mayor Koch left behind and to who right here.
When the former Mayor died, the federal estate tax exemption was at $5.25 million; and since his estate is estimated at twice that amount, Uncle Sam will net a cool $1.45 million. New York State has an estate tax exemption of just $1 million, meaning it will receive $1.1 million from the estate, according to a Forbes article.
As Forbes notes, Koch could have made some savvy estate planning moves before he died by:
Creating a trust for the benefit of his nephews, who inherited the bulk of his estate, and their descendants. Up to $5.25 million that goes into a trust would have been exempt from generation-skipping transfer tax. (And, would have protected those assets for generations upon generations. This was a big oversight.)
Making additional gifts up to $5.25 million right before he died could have significantly reduced his state tax bill, since New York does not have a gift tax. This would have saved his heirs an estimated $600,000.
And there’s more he could have done as well, but he either didn’t get good counsel or he didn’t heed it. Now, it’s too late. And, of course, it’s all public.
If you would like to learn more about strategies to keep your money out of the government and the size of your assets totally private, call our office today to schedule a time for us to sit down and talk. We normally charge $750 for a Georgia Family Treasures Planning Session, but because this planning is so important, I’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call today and mention this article.
Michigan Probate Attorney Andrew Mayoras has written in his blog, The Probate Lawyer Family Feud Blog, details of yet another celebrity death, this time Walter Cronkite. As Andrew notes, one of the big drawbacks to relying on a will (instead of a trust) is that wills must pass through probate court and are public documents. They can be read by anyone.
So anytime a celebrity dies without leaving all of his or her assets in a trust and/or joint tenancy, it gives the press something to write a story about.
The New York Post recently published an article about the final wishes of the late, great broadcaster Walter Cronkite who died on July 17, 2009 at age 92. You can read it here.
It is reported that Cronkite left most of assets (believed to be worth millions) to his children and aides from CBS. His August, 2005 will excluded his girlfriend, Joanna Simon (sister of singer Carly Simon). It appears he was very generous to Simon during life, but didn’t want to name her in his will out of respect for his wife of nearly 65 years, who passed in 2005.
As Mr. Mayoras notes, the best thing about probate court — with its publicity, added expense, and breeding ground for family disputes — is that it can be avoided. Walter Cronkite is not alone in subjecting his family to probate court when he easily could have bypassed it with a properly funded revocable living trust.
While his family hopefully won’t have to make multiple trips to court, like Michael Jackson’s family has been forced to do, he certainly had more than enough money to avoid this common estate planning
mistake. In fact, revocable living trusts make sense for most people — millionaires or not.
SOURCE FOR POST: The Probate Lawyer Family Feud Blog
My colleague and fellow estate planning attorney and blogger, Jennifer N. Sawday, of the California Estate Planning Blog and the law firm of Tredway, Lumsdaine & Doyle, LLP has written a post on the recent deaths of Michael Jackson, Farrah Fawcett and Ed McMahon. She has gotten some nice feedback on it in the blogging circles (way to go, Jenni!) and I have reposted it below:
very notable celebrities have died. Ed McMahon, Farrah Fawcett and now
Michael Jackson. Each had families. Each had loved ones. Each had
assets. And each had potential contestants to their estate. Did each
have an estate plan in place that was updated and reflected their
Time will soon find out. The media will report if their
estate administration turns out to be a mess like Anna Nicole Smith's
Ed was survived by his wife so his estate is likely to be
less burdensome whether he had an estate plan in place or not. A
surviving spouse generally has an easier time on formal estate
administration than children or other loved ones.
If you are
not married like Farrah or Michael were — having an estate plan in
place is very important especially if you want to provide for your
partner or other loved one despite not being married. Both Farrah and
Michael had children that should be provided for. And Michael is
survived by three young children. The mother of two of the children
relinquished her parental rights so their guardianship and care may
very well wind up being a contested matter.
You need to outline
your wishes for disposition of your assets, nominate a successor
trustee or executor to handle your affairs and otherwise make your
wishes known. Where there are minor children in place, it is very
important to nominate guardians and have a trust in place in the event
of your passing.
It simply does not matter who you are. An
estate plan carefully drafted and funded in conjunction with your
professional advisors, such as your attorney, accountant and financial
advisors, is important. Important for everyone including celebrities.
May Ed, Farrah and Michael RIP.
SOURCE FOR POST: California Estate Planning Blog