Palm Beach is home to some of the richest estates in the country. Celebrities, retirees and multimillionaires have chosen to build their dream homes here. However, as the old saying goes, “The more you have, the more you have to take care of.” Those who want to protect their estate for their loved ones need to do some wise estate planning.
The recent sudden death of actor Philip Seymour Hoffman was shocking and sad to many in show business and beyond. At 46 years old, he had accomplished a lot and built a legacy. While he didn’t live in Palm Beach — or Hollywood for that matter — there are things we can learn from some of the mistakes he made in protecting his $35 million estate in New York.
Hoffman had a longtime partner whom he never married, although the couple had children together. What estate planning he did was done in 2004 when he created his will, and it appears it was not updated at any point after that. Many people make this mistake of never revisiting their estate planning documents as life events and changes take place.
His will included a trust for his oldest child and left the remainder of his estate to his longtime partner. At the time the will was executed, the couple had only one child — a son. They later had two girls. Whether future children are mentioned in the will or not is unknown, making it unclear if they will benefit the same as the son without appeals being made.
Hoffman’s longtime partner also would have been better off if the couple had gotten married. By not marrying, a good deal of the remaining estate will be taxed at 40 percent. About $5.34 million will fall under an estate tax exemption, but that will leave the other $30 million subject to tax. Married couples can qualify for an unlimited marital deduction.
Whether you are wealthy or only have a little, estate planning is important. Consulting with an estate planning attorney can ensure you cover all bases. It is also very important to remember to keep your estate planning documents updated. The same goes for beneficiaries on insurance policies, retirement plans and any other documents requiring a beneficiary.
Source: Daily Finance, “Philip Seymour Hoffman’s 3 Biggest Estate Planning Mistakes” Dan Caplinger, Feb. 25, 2014