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SENIOR ADVOCATE

By Liza Horvath

 

Estate Planning of the Stars

 

When I was single, my sister was the named beneficiary of my estate and she was also the one who would “pull the plug,” should something happen to me medically. It was a three a.m. “ah-ha” moment when I decided that giving the person who would inherit my estate the ultimate decision of when to end my life may not be the best estate plan. After all, there is a saying that goes, “Lead me not into temptation, I can find it myself.”

 

Joking aside, the consequences of our estate planning are hopefully intentional and well thought-out, but some subtleties can elude us. Celebrity estate plans - which routinely seem to make it into the public eye – can give us much to think about.

 

James Gandolfini’s sudden death at the age of 51 is a good example. Gandolfini died with a will – not a trust – so it was admitted to probate and is now public record. We know that he had an estate of $70 million and, because he left most of it to his sisters and young child, his estate will pay about $30 million in estate taxes - extremely inefficient in terms of tax planning. Gandolfini also held real estate in Italy which he wanted to go to his son and daughter. Unfortunately, other countries have inheritance laws that differ from the U.S. and Italian law may dictate that a share of the property go to his spouse – which was not, according to his writings, what he wanted.

 

On the other hand, Steve Jobs left an estate of $7 billion which will pass by living trusts and charitable bequests and minimal estate taxes, if any, will be paid. Jobs also had a blended family – his first child was born out-of-wedlock to another woman so that child would not automatically share in his estate. It is assumed that his documents addressed that child but the public cannot know the details of his estate because his planning is private – due to the use of trusts. Job’s planning was good but unlike Gandolfini, Jobs was reminded of his mortality due to his illnesses and, on top of that, he was a brilliant innovator and would have easily understood the technical nature of estate tax planning.

 

Philip Seymour Hoffman’s will included language to expressing his desire that his son be raised in Manhattan, Chicago, or San Francisco or at least visit the cities regularly to be exposed to the culture, arts and architecture those cities offer. Seymour must have known that an estate plan is not just a fill-in-the-blanks exercise – it should be considered an expression of your values and express what you want your legacy to accomplish.

 

Movie star Paul Walker left his estate in trust to his daughter, Meadow Rain Walker. Walker did not name Meadow’s mother as caretaker of the money, however, he named his own mother which is an excellent division of duties. This way, Meadow’s mother can ask for funds and Walker’s mother  can make sure the funds are used for their intended purpose.

 

Giving consideration to our planning and the assumed result is important. My husband is now the beneficiary of my estate and he is also the one with the “pull the plug” right… oops, I guess we have some further planning to do!

Liza Horvath has over 30 years experience in the estate planning and trust fields and is the president of Monterey Trust Management, a financial and trust management company. This is not intended to be legal or tax advice. If you have a questions call (831)646-5262 or email liza@montereytrust.com

 


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