In the past couple of years, we have sadly lost many notable celebrities. You may have heard about the passing of Aretha Franklin, Kate Spade, Prince, and Stan Lee. Did you also know, however, that each of these celebrities passed without leaving comprehensive estate planning protections in place for their loved ones? Many of us may not understand just how important estate planning is. This is why we want to share with you some valuable estate planning lessons that we can learn from celebrities, so you can make an informed decision about your planning goals and needs.
Avoid Estate Tax Liability
Iconic singers, Aretha Franklin and Prince, both passed without any estate planning provisions in place. As a result, both of their estates are subject to large estate tax liability. Aretha Franklin’s $80 million estate, for example, is estimated to be liable for $32 million worth of estate taxes, while $80 million of Prince’s $200 million estate is going toward estate taxes. One of the most effective ways of avoiding this type of liability is to discuss your planning goals and needs with an experienced estate planning attorney.
One of the primary benefits of setting up an estate plan is the privacy and protection for your assets it provides. Unfortunately, if you pass without leaving any planning protections in place, your estate will be subject to probate proceedings. As a result, information about your assets will be considered a matter of public record and anyone who would like access to that information can easily obtain it. Prince’s estate, for example, has been tied up in probate proceedings for more than two years, and his heirs have been unable to receive any funds from his estate.
Protect Children With Special Needs
If you have a child with special needs, it is important that you consider setting up a special needs trust for their behalf. This is a unique type of trust that provides protection for your child, including protecting the government benefits he or she is entitled to and any inheritance he or she may have. Aretha Franklin, for example, has a special needs child who was left vulnerable due to her lack of planning. Help ensure this does not happen to your child by creating a comprehensive estate plan and special needs trust while you still have the opportunity to do so.
Litigation is a lengthy and expensive process that most people want to avoid. One of the best ways to avoid your assets becoming tied up in probate proceedings or litigation is to leave clear instructions about how you would like your assets to be distributed in your planning documents. Fashion designer, Kate Spade, was going through a divorce at the time of her passing, and had not updated her estate plan to reflect her changes in circumstances. Marvel legend, Stan Lee, is another example of a celebrity whose estate is likely to be contested and litigated for some time. It has been reported that he had many different planning documents created with different attorneys and advisors, and, before his death, was a victim of financial elder abuse. This is why it is important to leave clear directions about the distribution of your assets so your loved ones can follow your wishes after you are gone.
These planning pitfalls may be avoided by careful and comprehensive estate planning. Do you have questions? Are you ready to get started on creating your planning documents? Do not wait to reach out to our office. As always, we are here to help you reach your goals and ensure your loved ones are protected and taken care of in your absence.