Estate And Asset Protection Planning Mistakes Hurt The Rich And The Not So Rich
Why talk about estate and asset protection planning mistakes?
For many, the thought of estate and asset protection planning mistakes has not ever been a concern. Once upon a time it was thought that only the very wealthy required estate and asset protection planning services. However, as our country has become more litigious and many people have company sponsored 401k retirement plans, a well thought out estate and asset protection plan has become integral for most people, though far too many people haven’t come to that understanding yet.
Unfortunately the COVID-19 pandemic has created urgency around this topic, especially for anyone who has lost loved ones to COVID without having any kind of will or plan in place. The hardships loved ones will have to endure because of lack of estate planning or poor estate planning can be devastating. But it doesn’t have to be that way.
Learn From the Estate and Asset Protection Planning Mistakes Made By Wealthy Celebrities
It’s fairly easy to understand how important a well thought out estate plan is when you look at the estate and asset planning mistakes very wealthy people have made. This is particularly true of many celebrities whose unexpected deaths have placed enormous tax burdens and other hardships on the beneficiaries of their estates. In some cases, celebrities have died without having a will or any plan or designated beneficiaries. Some have died without letting anyone know where their will or legal papers are. So, you see, even people with enormous wealth make mistakes that could have easily been avoided.
Most people are not dealing with the kind of wealth that celebrities leave behind. But, remember, it’s not always the amount of your estate that’s most important, it’s how you want it to be distributed and to whom, no matter what the value. You want to make sure that things go to the people you want them to go to. And you want to make sure the person you designate as the executor of your estate knows where your documents are.
Michael Jackson’s Estate Planning Mistakes
One of the most famous cases where estate planning went wrong is that of Michael Jackson’s estate. According to an article I recently read, “Michael Jackson’s 2009 death set off a string of legal battles over his roughly $500 million estate. The biggest issue? To protect his estate, Jackson had created a revocable living trust designed to transfer his wealth to his children and his mother when he passed. But he never funded the trust. Instead, his entire estate had been left outside the trust. The estate had to go through the probate process while Jackson’s children and his mother lived off an allowance (of $8 million a year) managed by the estate’s executor and a judge for years. During the probate process, the estate faced numerous legal challenges from creditors as well as Jackson’s family.
It’s true that a trust can be a valuable tool to streamline the transferring of assets to your heirs, while avoiding probate, but if you don’t register your assets in the name of that trust, it’s absolutely worthless.
Prince’s Asset Protection Missteps
Prince died in 2016 death, but even now his estate, estimated to be worth more than $200 million, has yet to be valued, settled, or dispersed. That’s because Prince had not done any estate planning and did not even leave behind a will. His siblings have not received anything, yet the lawyers have benefitted tremendously. If you die without a will—called dying intestate—the process of divvying up your assets is left to the state.
When actor, Heath Ledger died at age 28 in 2008, he did have a will which designated that everything be left to his parents and three sisters. Unfortunately his will had been written before his daughter, Matilda, was born. So his 2-year-old and her mother, actress Michelle Williams, were left with nothing. The point here is to use review and update your estate plan documents whenever there is a life-changing event such as the birth of a child or a divorce.
Florence Griffith Joyner (FloJo)
In the case of Florence Griffith-Joyner, the Olympic sprinter known as FloJo, it was believed that she had a will when she died at the young age of 38. Unfortunately her family couldn’t find the document. According to the Kiplinger.com article, “Years of legal battles followed as Joyner’s husband and her mother couldn’t agree on whether FloJo said her mother could continue to live rent-free in the couple’s condominium for the rest of her life.” Having a plan is important but making sure it’s accessible is equally important. https://www.kiplinger.com/slideshow/retirement/t021-s003-estate-planning-mistakes-celebrities-made/index.html
Marlon Brando died in 2004 and the actor left the bulk of his roughly $26 million estate to his producer and other associates. However, his longtime housekeeper claimed that Brando had promised her that she would inherit his home when he died—but Brando either never promised her the home or never took the time to put the promise in writing. She later sued Brando’s estate for the value of the home, plus $2 million in damages. The case settled in 2007 for $125,000.
Lesson: Put each of your wishes regarding your estate and your assets in writing. Updating your estate-planning documents to include new promises or beneficiaries is your best bet.
You Can Be Wise Even If You Aren’t Wealthy
You don’t have to be famous or ultra-wealthy to benefit from an estate and asset protection plan.
You just need to have assets that someone would be willing to attempt to get through a lawsuit and/or loved ones or charitable organizations that you want to be sure will get whatever assets you have upon your death without having to pay taxes or lawyers’ fees or get tied up in a lengthy probate process.
With the pandemic still very much active it’s important to take every safety precaution. And, it’s equally important to establish or review and revise an outdated estate and asset protection plan. Give us a call. We can work with you at a distance via digital services and in person.