Sometimes It Seems Like Celebrities Have It All
The world is their oyster. They’ve got money, possessions, fame, and high-paid advisers. Yet, they still make mistakes. Take acclaimed actor Phillip Seymour Hoffman as an example. He died unexpectedly at age 46, leaving behind his long-time girlfriend, three children – and a tangled estate mess.
Failed To Create A Trust For His Children
Mr. Hoffman reportedly did not want his children to become “trust fund kids.” To avoid this problem, he left everything to their mother and long-time girlfriend, Mimi O’Donnell. Though he did leave a will that set up a trust, only his son, Cooper, was named as a beneficiary. Hoffman’s other two children were born after the Will was executed.
Failing to set up a trust fund for his children’s benefit was a big mistake for several reasons. Because he used a Will and not a trust to pass his assets to his beneficiaries, his estate became public record. While Wills are recorded in probate court, trusts are not.
Also, a well-crafted trust would have guaranteed money for his children’s future. Hoffman left all his money to their mother, who is not legally obligated to use or save the money for their children.
Failed To Use Tax-Reduction Strategies
The marital deduction offers great tax breaks for married couples, but not for people who just live together. It may seem like a person’s marital status shouldn’t make a difference in their estate tax – but it does.
Since Mr. Hoffman and Ms. O’Donnell never married – and he didn’t use any tax reduction strategies – so she lost important tax benefits. In fact, even her heirs may face estate tax woes when they inherit her estate.
Failed To Update Estate Plans
A will typically states the names of the testator’s children. Specific bequests may be made to them or a guardian may be named if the children are minors. Sometimes a Will uses language that states the terms of the Will apply to children not yet born. So, if you have one child when you sign the Will and have more afterwards, they are covered. (Really, though, you should just update your estate plan if you have more children!)
Because Mr. Hoffman did not update his Will, it only names his oldest son, Cooper. And, unfortunately, his Will did not contain any language referencing any future children. This could lead to his son getting more of Hoffman’s estate than his two daughters.
Avoid Estate Planning Mistakes Now
Review your estate planning documents and make changes as needed. To discuss your concerns with a qualified Arizona estate planning lawyer, call us at (480) 418-8448 or check out one of our free seminars. We routinely host free live seminars and live virtual seminars you can participate in right from your own home. We offer services for clients throughout Arizona, including Chandler, Gilbert, Sun Lakes, Tempe, Phoenix, Mesa, Scottsdale, and Apache Junction.