Having the life of a celebrity would be great, right? If you do- learn from their mistakes and don’t leave a mess for your loved ones like they have.
You’d think that the rich and famous would care about who inherits their riches when they’re dead and gone. But oddly, many celebrities have died intestate, which means they never made out a will.
Howard Hughes’ $2.5 billion estate was eventually distributed among 22 cousins because he died without a will. Prince’s $300 million estate is being fought over by family members because he didn’t name heirs. Jimi Hendrix, Bob Marley, Pablo Picasso and Michael Jackson all died without wills, making their estates family battlegrounds and subject to huge estate taxes.
In fact, a survey from Lawyers.com in 2009 revealed that only 35 percent of Americans had a will. So instead of planning for their wealth after death, most Americans don’t form a will that ensures their estates are distributed in a specific way that avoids federal and state estate taxes.
Update Status: Incomplete
Everyone’s life changes day-by-day, and that’s something to keep in mind after you’ve signed a will. You could add children, subtract a spouse, or have a falling out with your best friend that changes the division of your estate. The point is- life moves on, and you have to make sure to update your will whenever it does.
When singer Barry White died in 2003, he was reportedly separated from his second wife and living with his girlfriend of several years. Because he never changed his will, the estranged wife inherited everything, while his last love got zip.
The need to pay your taxes doesn’t stop, even after you die. If you don’t plan your will out correctly, you might be putting your heirs into a situation where they have to sell part of their inheritance to pay for federal and state estate taxes.
“The Sopranos” star James Gandolfini died with a $70 million estate and a will leaving only 20 percent to his wife. Consequently, about 80 percent of his estate was subject to state and federal estate taxes that could have amounted to 55 percent of his fortune.
Tax planning could have reduced the tax burden for Gandolfini’s heirs. He could have drawn up a marital trust that would have taken advantage of the marital tax exemption; you can leave your entire estate to a spouse tax free — and protected his two children too — with a little bit of planning.
Forgetting about personal items
When you’re asked to go over all of your valuables, it’s easy to overlook personal items that could be worth a lot of money and become the root of a family battle.
For example, Robin Williams’ family fought over his collection of film memorabilia.
To avoid fights like these, make sure you bequeath personal items in your will. If your beloved baseball card collection belongs to your son, make sure you state that explicitly in your will. If your daughter should get your Lexus, write that down and include the bill of sale so no one can dispute that your car was already given away before death.
Creating an estate plan is a difficult task with lots of work, but when done right there is an exponential pay off. At the Law Offices of Cheryl David, we can help if you have any questions.