Celebrity Estate Planning Mistakes

The size and scope of the mistakes made by celebrities may be enormous, but many of the mistakes are common for, well, us common people. Learning estate planning lessons from the mistakes made by celebrities and very wealthy people is a good way to prevent yourself from making those same mistakes, says the recent article “Lessons to be Learned From Failed Celebrity Estates” from Forbes.

Let’s start with James Gandolfini, famed for his role in The Sopranos and many movies and television shows. Strangely, he left only 20% of his estate to his wife. Had he left the entire estate to his wife, the family would not have gotten stuck with a huge tax bill. Instead, 55% of his total estate, including a significant art collection, had to be sold to pay estate taxes.

James Brown, the godfather of soul, left copyrights to his music to an educational foundation, tangible assets to his children and $2 million for his children’s education. That sounds like smart thinking, but his estate planning documents contained a great deal of ambiguous language. His girlfriend and her children challenged the estate. Six years and millions in estate taxes later, his estate was settled.

Michael Jackson’s estate fail is a classic error. He had a trust created but failed to fund it. The battle in the California Probate Court over control of his sizable estate could have been avoided.

Howard Hughes, famed entrepreneur, aviator and engineer wanted his $2.5 billion fortune to go towards medical research, but no valid will was found. Instead, his assets were divided among 22 cousins. Before he died, he did take the step of gifting Hughes Aircraft Co. to the Hughes Medical Institute. The company was not included in his estate, but everything else was.

Author Michael Crichton was survived by his pregnant fifth wife, and a son was born after his death. Crichton failed to update his will to include the future offspring. His daughter from a previous marriage fought to exclude his son from the estate. His will included language that specifically overrode a California statute that would have included his son in the estate. All heirs not otherwise mentioned in his will were to be excluded.

Doris Duke inherited a tobacco fortune. When she died, she left a $1.2 billion estate to her foundation, with her butler in charge of the foundation. The result was a series of lawsuits claiming that the foundation was being mismanaged, and cost millions in legal fees. Foundations of that size need a strong management team to avoid legal challenges.

Few estate failures are as graphic as that of Casey Kasem. The famed radio personality’s estate battle after his death included kidnapping and the theft of his corpse. His wife and children from a prior marriage fought over his care, his end-of-life care and the disposition of his remains.

Iconic artist Prince died without a will. The Queen of Soul, Aretha Franklin, died without a will, then handwritten wills were found in her home weeks after she died. For both families, lawsuits, court proceedings and huge estate tax bills could have been avoided.

If you don’t have an estate plan, get it started. If you haven’t looked at your estate plan in a while, have it reviewed. Make provisions for your family, take a close look at potential tax liabilities and if you have been married more than once, make sure to have a rock-solid estate plan that will withstand challenges.

Reference: Forbes (June 18, 2021) “Lessons to be Learned From Failed Celebrity Estates”

 

Continue ReadingCelebrity Estate Planning Mistakes

Can I Be Sure My Estate Plan Works?

Most estate planning attorneys will tell you that the same mistakes recur with frequency whether the estate is worth a billion dollars, several hundred thousand dollars or anywhere in-between. Of course, the biggest mistake of all, reports the article “7 Steps To Ensure A Successful Estate Plan” from Forbes, is not having an estate plan at all. Having an outdated estate plan can be just as bad.

Everyone should have a complete estate plan and it should be reviewed every few years and revised as life and laws change. The estate plan should include a will, trusts, power of attorney, advance medical directives and other planning elements. However, there’s more to an estate plan success than documents.

Education and communication. If the next generation isn’t prepared for the contents of the estate plan, it’s going to be challenging for them to carry out your wishes. They may mismanage assets, or even lose them to scammers. At any age and stage, people who are not ready for an inheritance may easily go through their entire inheritance and find themselves at a loss for what happened.

One solution is to leave the estate in trusts and limit access. A better solution is to ensure your heirs are prepared and understand how to handle money. Children benefit from their parent’s teaching them about managing, accumulating and donating money.

Prepare for family conflict. Sometimes tensions are out in the open, but other times they hide below the surface until one or both parents die, or learning the details of the estate plan leads to family conflicts. Thinking the children will work things out on their own is asking for trouble. Siblings with very different economic situations or lifestyles respond differently to their parent’s estate plan. Don’t ignore these potential problems. Talk with your estate planning attorney. It’s likely that your estate planning attorney has seen just about every situation and will have good ideas for preserving family harmony.

Plan ahead for gifting. Gifting is often a large part of an estate plan. Gifts are a good way to get the next generation comfortable with inherited wealth. However, don’t just write checks. Create and execute a strategy. Know that cash gifts are definitely spent faster, while property gifts tend to be kept and held for the future.

Make sure you understand the plan. You’d be surprised how many smart and sophisticated people don’t actually understand their own estate plans. Meet with your estate planning attorney on a regular basis and ask questions – and keep asking until you understand everything. Take notes during your meeting, so you can go back and review to see if you have any other questions.

Get organized and prepare. The best estate plan in the world is at risk, if the executor doesn’t know where documents are located. Make sure the information is written down and the person you chose to serve as executor knows where things are. We should all be simplifying our lives and records as we age, both to make our lives easier as the inevitable cognitive decline occurs and to make the settlement process faster.

Create a business succession plan. Most business owners fail to do this. It makes it all but impossible for the next generation to keep the business going. The value of a small business declines rapidly and sometimes evaporates, when there is no plan for succession. If the intent is to sell or pass the business on, a succession plan needs to be prepared, long before it is needed.

Fund trusts. The most common mistake in estate planning is creating trusts and then failing to fund them. If the trust is created but assets are not retitled, the estate plan will fail. Real estate, vehicles, boats and financial accounts that are intended to be put into the trust need to be retitled.

My office is open to set up a consultation to discuss these issues or just to review your existing plan.

Reference: Forbes (May 27, 2021) “7 Steps To Ensure A Successful Estate Plan”

 

Continue ReadingCan I Be Sure My Estate Plan Works?

Deadly Health Mistakes to Avoid after 50

All of us can improve the odds of a longer, more healthful life simply by avoiding the deadly health mistakes that people tend to make after age 50, published in Money Talks News’ recent article entitled “7 Deadly Health Mistakes People Make After Age 50.”

  1. Allowing social connections to fade. Loneliness is deadly. A 2018 study found that isolation may double a person’s risk of dying of cardiovascular disease. What’s more, social isolation is linked to increased risk of depression, cognitive decline, obesity and a weakened immune system. Men are at greater risk of suffering from social isolation, as a recent survey found just 48% of retired men living alone were very satisfied with the number of friends they had. However, about 71% of retired women living alone were very satisfied with their number of social connections.
  2. Enjoying too much high-sodium foods. About 90% of the sodium that we consume comes from salt. 90% of Americans over age two also consume too much sodium, so reduce your sodium intake. Do that and your blood pressure should fall within a couple of weeks, helping to lower your risk of deadly heart disease and stroke, the CDC says.
  3. Postponing colorectal cancer screening. Medical experts say that all adults 50 to 75 should have colorectal cancer screening. This test can find precancerous polyps, which are the main source of colorectal cancer, which is treatable when found in its early stages. With the Affordable Care Act of 2010, colorectal screening is among a list of preventive services that generally are free for people who have health insurance and are between the ages of 50 and 75.
  4. Not taking a daily aspirin. Not everyone over 50 should take an aspirin every day, but it can be good for those with certain potentially life-threatening health conditions. The Mayo Clinic says, “The U.S. Preventive Services Task Force recommends daily aspirin therapy if you’re age 50 to 59, you’re not at increased bleeding risk and you have an increased risk of heart attack or stroke of 10 percent or greater over the next 10 years.”

Taking aspirin makes blood platelets less “sticky,” helping to prevent the clots that lead to heart attacks and strokes, explains Harvard Medical School. Talk to your doctor before starting a daily aspirin regimen.

  1. Failing to lift weights. As we get older, the risk of the bone disease osteoporosis increases. About 10 million people have osteoporosis, and 44 million more have low bone density, which puts them at risk for the disease, according to the National Osteoporosis Foundation. Women are especially at risk for osteoporosis, since one in two women will break a bone due to osteoporosis. This happens more often in women than a heart attack, stroke and breast cancer combined. Getting sufficient calcium and vitamin D is critical to preventing osteoporosis. Weight-bearing exercise is also a great way to strengthen bones.
  2. Not drinking enough water. Hydrate! The Mayo Clinic says that older adults carry a lower volume of water in their bodies. In addition, they are more likely to take medications that boost the risk of dehydration. Their sense of thirst is less acute, making it easy for them to forget the need to drink. Severe dehydration can lead to:
  • Seizures
  • Life-threatening heatstroke
  • Urinary and kidney issues; and
  • Hypovolemic shock (low blood volume shock).

As a general rule, men should drink 15.5 cups (3.7 liters) of fluids and 11.5 cups (2.7 liters) of fluids a day for women. 20% of daily fluid intake also typically comes from food.

  1. Continuing to smoke. “Puff, puff, puff that cigarette!” Kicking the nicotine habit pays dividends at any age. The improvements accumulate over the next nine months, and by one year after quitting, your heart attack risk drops dramatically. However, improvements can be fast. For example:
  • Your heart rate and blood pressure drop 20 minutes after quitting:
  • The carbon monoxide level in your blood drops to normal a few days after quitting; and
  • Circulation improves and your lung function increases two weeks to three months after quitting.

Reference: Money Talks News (May 24, 2021) “7 Deadly Health Mistakes People Make After Age 50”

 

Continue ReadingDeadly Health Mistakes to Avoid after 50