Be Sure to Avoid Estate Planning Catastrophes Like These
Tragedies in any walk of life are always a shocking and somber affair. Celebrity probate tragedies, however, continue to be a thing of intrigue as we, the general public, struggle to understand how a person with vast amounts of wealth could fail to plan for the future and secure all their financial matters. Anytime a celebrity passes away and we come to find out they did not have a will, trust, or general estate plan, the news is shocking, to say the least.
Let’s take a look at five celebrity probate tragedies and what lessons can be learned.
(d.1976) – No Estate Plan
The eccentric billionaire passed away with an astounding net worth of $2.5 billion but the entirety of his estate was not settled until 2010. Hughes left no will or legal plan of action and most of his wealth went to the Howard Hughes’ Medical Institute, a few relatives, and to the attorneys working on the case. Immediately after Hughes death, a host of people claiming to have the billionaire’s final will and testament came forward, but they were all deemed to be fake.
What we can learn:
Most of us will not pass away with $2.5 billion worth of assets. Many people, however, will pass away with homes, cars, investments and other assets they would like to pass on to family members and loved ones. Probate and attorney fees can be quite expensive and eat away at a person’s estate and that is not mentioning the emotional burden placed upon a family dealing with the probate court. Be sure to set up a smooth transition of your assets by drafting documents that specify where your estate will go after your death.
PHILIP SEYMOUR HOFFMAN
(d. 2014) – Paid Extra Estate Taxes
The Academy Award-winning actor Philip Seymour Hoffman tragically passed away in 2014 at the height of his career. Hoffman died without legally marrying his life partner, a woman by the name of Ms. O’Donnell, who was the mother of his children. Hoffman’s partner received $20 million after his death, but since the couple was never married the estate was forced to pay $15 million in taxes and Ms. O’Donnell never received the $35 million Hoffman’s estate was worth.
What we can learn:
Even though married couples can receive unlimited tax-free gifts from their spouse, other family members do not enjoy those same distinctions. If you have other people in your will, the best course of action is to create a living trust and avoid the probate process altogether and save on court fees and extra taxes.
(d. 2006) – Estate planning mistakes
Music legend James Brown’s passed away in 2016 with an estate valued at $50 – $100 million. James had an estate plan and gave most of his assets to a Charitable Trust to provide a scholarship to needy children in South Carolina. Brown’s estate, however, ended up in a legal battle that still has not been settled 10 years later. Brown made two huge mistakes: creating his estate plan later in life and not informing his relatives about what he planned to do with his assets.
What we can learn:
- Protect your assets before the age of 65
People older than 65 are susceptible to elder abuse, and from a legal perspective, estate plans made after that age are more likely to be disputed in court. Brown’s heirs, who had received little inheritance, argued that the singer was being controlled and not under the right mind to make any estate planning decisions.
- Talk to your Heirs
Brown did not have a great relationship with his heirs, yet most of his family members were shocked to find out he donated the majority of his estate to charity. If Brown had informed his heirs of where those assets were to go, the ensuing court battle may have been avoided.
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