A lot of us have aversions for Estate Planning. If we do a TV ratings of popular programmes, any one on Estate Planning will fall short. Estate Planning as we have found out is not a popular entertainment programme. The CBS (the producers of “The Bachelor”) once had a TV reality show known as “The Will”. The Will was about a wealthy land developer who oversees a competition among several of his would-be heirs to give away a portion of his Estate.
A series of challenges eliminates the heirs until the last person left collects the inheritance. The show lasted only one episode. While the sudden demise of the programme? Though we may not have the full details, what we do know is that viewers’ disdain for Estate Planning and not production value would have caused the show’s cancellation.
A general aversion to Estate Planning issues is common. While many speculate that the widespread dislike for activities that acknowledge human mortality accounts for poor planning, others suggest that many of us simply do not bother what happens to our loved ones after we are gone.
Philip Seymour Hoffman
Few months after the death of Philip Seymour Hoffman (an American actor, director, and producer. He was prolific in both film and theatre), there are more and more revelations on how he rejected professional advice. Though a brilliant author, Hoffman had much to learn about Estate Planning. Recent reports indicate that he repeatedly rejected the advice of his attorney and accountant, both of whom advised him on the need to create a trust. For him, having a Trust would amount to his children living as “trust funds kids.” Instead, he believed that the children’s mother — and his longtime girlfriend — was capable of caring for them even though he did not believe in marriage.
The Real Issues
It is estimated that his Estate would have to pay unnecessary tax in the region of US$15million, out of an estimated networth of US$35million. While the tax authority would love this, many of us tax payers would never subscribe to this.
Sadly, because of Hoffman’s aversion to proper Estate Planning, his 34 million dollar estate faces a huge estate tax bill and other problems that could (and should) have been avoided if he had listened to the legal and financial advice he was given. With a Revocable Trust (at the very least), Hoffman’s girlfriend and children would have been much better off if he had done the proper Estate Planning
Marriage Really Matters
Hoffman gave his $35 million Estate to his girlfriend, despite not being married to her. Marriage saves estate and gift taxes. You can give an unlimited amount to your spouse tax-free during life or on death. If they had been married, the property could all pass to Ms. O’Donnell tax-free but that would obviously not be the case.
Keep It Private
Hoffman’s Will is in probate, which is public, expensive, time consuming and unnecessary. For very little money, a Revocable Trust will keep your affairs private and achieve your goals. A Revocable Trust is simple and confidential.
You will need to keep your Estate Planning documents (Will or Trust) updated at all times especially at major achievements. Hoffman’s Will mentioned his son Cooper, but not his two daughters born later.
Consider Children’s Needs and Ages
Many parents think their children will be ready to receive and manage assets at age 21, 25, or 30. Often, this may not necessary be so. However, Hoffman was clear that he did not want Trust fund kids.