The death of acclaimed, Academy award-winning actor Philip Seymour Hoffman at the age of 46 was a great tragedy to his family, friends and fans. Making the circumstance even worse, estate planning experts concluded that Hoffman’s estate plan was a “mess,” falling prey to many common estate planning mistakes. The sad situation highlights that bad estate planning can happen to anyone, and that each person who cares about his/her estate should be vigilant to avoid the types of errors that befell Hoffman and others.
First, Hoffman failed to engage in proper estate plan maintenance. His will was a decade old and had not been updated. Most people will experience some sort of life event with 10 years’ time — a birth, death, marriage, divorce or other — that impacts one’s estate plan. Regularly updating your estate plan helps ensure that the plan carried out after you die matches your objectives as they existed when you died, not as they were years earlier.
Second, the actor’s estate plan was publicly available. Privacy is a high-ranking goal for many people when they consider estate planning, especially someone as famous as an Oscar-winning actor. One way to maximize the privacy of your plan is through the use of proper trust planning. A trust (or trusts) may help you avoid probate and, as a result, help you minimize the extent to which the aspects of estate, including your assets and your distribution instructions, become public records available for viewing by anyone.
Third, a proper tax plan was not in place for the actor’s assets, estimated at around $35 million. Because Hoffman left most of his wealth to his longtime partner, Marianne O’Donnell, and the couple were not married, the estate tax liability on the Hoffman estate may well eclipse $10 million. David Mendels, director of planning at Creative Financial Concepts, pointed out to Today.com that Hoffman could have reduced this tax bill by using trusts and a gifting strategy during his lifetime to better protect O’Donnell’s inheritance.
Fourth, Hoffman’s will did not mention all of his children. The will makes reference to only one of the actor’s three children, according to Forbes.com. People may have a variety of reasons to leave children out of their estate plans. Perhaps they had a strained relationship or the child had already received large gifts during the parent’s lifetime. Regardless, it is important to mention each child in your estate plan, even if that child receives nothing. (Alternately, you might consider leaving that child a nominal distribution, such as $1). Otherwise, the child may claim that he/she is an “omitted heir” and entitled to receive a statutorily-dictated portion of your estate.
Finally, the actor did not use the services of an estate planning attorney. Today.com reported that the attorney Hoffman retained to draft his will “appears to specialize in real estate rather than trusts and estates.” Just like you would visit an ophthalmologist, not a podiatrist, to diagnose your vision problem, using an attorney who focuses his/her practice on estate planning is a must. Your Wisconsin estate planning lawyer has the deepest knowledge of all the estate planning tools available to you, and the most up-to-date knowledge of the laws that may impact your estate.
For an estate plan that will meet your needs, with a maximum of privacy, effectiveness and tax protection, consult Madison estate planning attorney Daniel J. Krause of Krause Donovan Estate Law Partners, LLC. His lengthy experience with the full spectrum of estate issues can help deliver to you a plan that will leave with the peace-of-mind you deserve. Contact Attorney Daniel J. Krause today.
Reach us through our website or call our office at (608) 268-5751 to schedule your confidential, no obligation initial consultation.
No Good Deed Untaxed: Coordinate Gifting Strategy With Estate Plan, Wisconsin Probate & Estate Planning Blog, Jan. 27, 2014
No More Outright Distributions; Give Your Heirs Protected Assets, Wisconsin Probate & Estate Planning Blog, Nov. 14, 2013
How Long Since You Looked at Your Will or Trust? If You Haven’t Recently, You May Want To, Wisconsin Probate & Estate Planning Blog, Oct. 15, 2013
Photo credit: Alan Light at Wikimedia Commons.