Estate planning does and don’t are often brought to light through other people, most notably celebrities. Their lives being more public, we hear of their successes, misfortunes and their deaths. We also hear about what they did or didn’t do in regards to their Estate Planning. The consequences of estate planning (or the lack of it) were highlighted following the deaths of several well-known and wealthy celebrities last year. Thorough estate planning not only benefits the rich and famous, but it provides advantages for anyone seeking to protect their families from financial burden or harm after they are gone.
Estate Tax Issues
None of us knows when we are going to die, and we certainly are not going to time our passing to save taxes. But former Yankee owner George Stein brenner and billionaire Roger Milliken – both of whom died in 2010 – picked a pretty good year to pass away. They passed away in the only year in the past 95 years without an estate tax. This timing saved their estate and heirs millions of dollars (and maybe even billions of dollars) in taxes.
2011 is different, celebrities offer estate tax planning does and don’t currently should make sure to take the estate tax laws into account, even if you don’t have the kind of money that Stein brenner or Milliken had. Current laws impose a maximum estate tax rate of 35% on any estates valued at more than $5 million. Married couples have a $10 million exemption, but if one spouse dies before the other and does not use the full individual $5 million exemption, any unused amount may be added to the $5 million exemption for the surviving spouse. Be careful, though, because under current law, if you don’t pass away before January 1, 2013, the current estate tax exemption drops to $1 million, with tax rates as high as 55%.
Actor Gary Coleman did not properly provide for his beneficiaries when he died because he failed to update his will, which left everything to his wife whom he had divorced years prior. After his death, Coleman’s family members and former wife not only fought over who received his estate, but they also fought over who got to arrange his funeral. On the other hand, actor Brittany Murphy took pains to keep her will and a trust updated, ensuring her mother received all of her assets when she passed, instead of her husband.
A court battle continues to rage over the estate of Farrah Fawcett and whether a producer friend or her trustee took advantage of her as she was dying of cancer in 2009. These types of battles are painful for both friends and families of the deceased, but they can be avoided with sound estate planning and keeping wills, trusts and other legal documents updated.
If you and your loved one are holding off on your estate planning, look to the stars and then contact Morris Hall for help.