Despite their wealth, many celebrities fail to properly manage their finances, resulting in the inability to pass on their assets to their loved ones. This month, we share three examples of mistakes celebrities made in their estate planning and how we can learn from them.
~ Wendy Guthro, Attorney & Counsellor at Law
"Keep your face always toward the sunshine, and shadows will fall behind you."
~ Walt Whitman
The Estate Planning Mistakes of Prince, Heath Ledger, and Michael Jackson: What Should We Learn from Them?
Celebrities have more money than most of us, but that doesn’t necessarily mean they take better care of it. Many famous people with substantial assets failed to take the right steps to enable those assets to pass to their loved ones. Let’s take a look at three mistakes in particular.
Prince – Failure to Plan
Music icon Prince died at the age of 57 without a Will or any estate planning documents. At his age, he probably believed he had plenty of time left to handle those types of arrangements. He was wrong.
As a result, Minnesota state law determined that his assets would go to his siblings and half-siblings. Claims from other potential heirs resulted in the case being tied up in court for years. While we may never know who he would have wanted to receive his money, no one other than bankers, attorneys, and consultants collected anything for years, and that was surely not his intention. In addition, a lack of planning led to excessive estate tax liability that reduced the value of his assets by nearly half.
The lesson to be learned here is that failing to create an estate plan is likely to lead to confusion and waste of the resources you leave behind.
Heath Ledger – Failure to Update
Actor Heath Ledger showed unusual maturity in executing a Will at the age of 24. However, he set the document aside and failed to update it after his daughter was born. He died two years after her birth, and his Will left all his property to his parents and sisters. His young daughter was left out entirely, which is certainly not what he would have wanted. Fortunately, his family voluntarily transferred the assets to his daughter, but others in that situation might not have been so fortunate.
The lesson from Heath Ledger’s experience is that an estate plan needs to be updated to reflect changes in your life.
Michael Jackson – Failure to Fund Trust
Out of these three examples, Michael Jackson was the most prepared. He had his estate planning attorney create a comprehensive revocable living trust so that his property would transfer directly to his designated alternate beneficiaries without being held up in the expensive probate process. He came so close to succeeding. But he stumbled at the finish line.
For the trust to accomplish its intended purpose, he needed to formally transfer his property into the trust. He failed to take that critical step. As a result, all his assets became part of his estate, and had to go through a lengthy and contentious probate process. Instead of receiving his property right away as he’d intended, his mother and children had to wait and worry and lose money in litigation.
The lesson to be learned from Michael Jackson’s estate is that it is critical to follow through with instructions after your lawyer prepares documents for you. If you don’t fund a trust, it is useless.
An Experienced Estate Planning Attorney Can Help You Avoid the Costly Mistakes
The list of celebrity estate planning mistakes is quite lengthy. For instance, Olympic sprinter Florence Griffith Joyner didn’t tell anyone where to find her Will, and family members fought for years about her intentions. Phillip Seymour Hoffman failed to plan for taxes and his family lost millions as a result.
What all the stories have in common is that planning mistakes can saddle your loved ones with uncertainty, heartbreak, and loss. But the team at Guthro Law can easily help you avoid those mistakes. Contact us today to learn how we could help you fill in the missing pieces of your estate plan.
The Millionaire’s Tax Could Impact a Surprising Number of People
When Massachusetts lawmakers passed an additional tax on income over $1 million, many people assumed that tax would never affect them. Some of those assumptions will be wrong.
If your family owns a business or real estate, transferring the business or property could cause income levels to surge across the threshold and trigger the extra tax. Conversion of funds into a Roth IRA could have a similar effect.
It is a good idea to talk to your estate planning attorney or other planning professionals to see how this tax could affect you and what steps you can take to minimize the additional tax burden on your family.
Happy New Year from the Team at Guthro Law
We would like to express our sincerest appreciation for the trust you have placed in us. Wishing you a Happy New Year filled with laughter, light, and peace.
~Wendy, Kathleen, Marie, and Jennifer
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Geitonogamy definition, noun:
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Attorney and Counsellor at Law
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