Once again a celebrity has died, leaving an estate in chaos. Clearly good intentions but poorly planned and with no follow through. As unfortunate as this might be, there are lessons to be learned and mistakes not to be repeated.
Most recently, the Oscar-winning actor Philip Seymour Hoffman became deceased, leaving an estate reportedly worth $35 million to his partner and mother of his three children, Marianne O’Donnell. Yet because the plan was not reviewed periodically, she is likely to face a multi-million dollar tax bill.
One of the mistakes Mr. Hoffman made was not updating his will after the birth of his last two children. The will was reportedly drawn up in 2004, more than nine years before his death, when he had only one child. The will provides for that child, a son, but because it was never updated, it fails to account for his two daughters.
Perhaps the biggest mistake of all was in leaving the estate directly to his partner instead of setting up a trust. That means the estate will get taxed now and then again at her death. Additionally, a trust also would have protected the estate from creditors and passed the assets on to descendants after the survivor’s death.
Lesson to be learned: Review estate plans and wills annually and update as appropriate for changes that have occurred over the previous year. That includes births, deaths, divorces, inheritances, etc.
No estate is too small to be affected in some way.
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The information herein contained does not constitute tax or legal advice. Any decisions or actions should not be made without first consulting a CPA or attorney.
The author of this blog, Steven M DiGregorio is President of Compass Asset Management Group, LLC and an Investment Advisor Representative with Spire Wealth Management, LLC.
Spire Wealth Management, LLC is a Federally Registered Investment Advisory Firm. Securities offered through an affiliate, Spire Securities, LLC. Member FINRA/SIPC