This is the fifth entry in a series I will be featuring about celebrity estate planning mistakes and what they could have done to prevent the problems that arose.
Name: Heath Ledger
Age: 28
Died: January 22, 2008, New York City
Cause: Probable drug overdose
Family: Daughter
Estate Mistake: Ledger had a will when he died of an overdose in 2008, but it was drafted in Australia before he found huge success and fathered a child in the United States.
His will did not reflect any of this, so a reported $20 million went to his parents and siblings. His family said they would give the entire estate to Ledger’s former girlfriend, Michelle Williams, and their daughter.
This is the fourth entry in a series I will be featuring about celebrity estate planning mistakes and what they could have done to prevent the problems that arose.
Name: Anna Nicole Smith
Age: 39
Died: February 8, 2007, Hollywood, CA
Cause: Probable drug overdose
Family: Daughter
Estate Mistake: The model turned “public curiosity” left a will, but it was apparently a poorly drafted document that accidentally disinherited her daughter. Her will had specified leaving out any “spouse and others’ heirs, including future spouses and children.” Her 20-year-old son had died shortly before Smith’s death. A court eventually made Smith’s daughter the sole beneficiary and named a guardian, which Smith did not do in her will.
Another estate case Smith was involved in still lives. Smith had married 89-year-old billionaire J. Howard Marshall II shortly before he died in 1995. Her claim to the estate made it all the way to The United State Supreme Court and is still bouncing in appeals.
Many families have now been “blended” together through remarriages and are increasing in number. These families typically include children and grandchildren from prior marriages. An estate planner needs to take extra special care in planning for these families. There are some complex issues that arise.
Estate planners need to ensure that certain children and grand-children are not unintentionally disinherited. Additionally, current spouses sometimes need protection from existing descendants and many times the assets need protection from former spouses. Premarital agreements, or prenuptial agreements, can also protect assets for descendants when a family becomes “blended”.
Estate planning for blended families can morph into the more important goal of asset protection. Trusts are always an appropriate tool to ensure assets are protected and pass to intended heirs. Ensure that your entire family is taken care of when you plan for your estate.
This is an article researched and written by Stephen Davis and Alfred Brophy. The topic is how Civil War-era families maintained their wealth within thier own families by properly using wills and trusts. These families used Estate Planning tools that are still around today to accomplish many of the same goals that modern families strive for.
Huge plantation estates were held in trusts for generations ensuring they would not fall to anyone outside of the family. Families who were concerned about son-in-laws for their daughters had the daughter’s property held in trust so the the wealth would not be lost through marriages.
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1398522
Deborah Jacobs is an estate planning attorney and journalist for Forbes.com. She examines the inevitable problems with DIY will and trust kits.
As Timothy E. Kalamaros, a lawyer with his own practice in South Bend, Ind., says, using a DIY will is like “pulling your own tooth with a pair of pliers instead of going to the dentist.”
If you care for a child or other loved one with a disability, you’ve no doubt thought about what will happen when you’re no longer able to give that care. There is a solution. You can leave property and funds to your disabled loved one in a special needs trust without jeopardizing their government benefits.
Problems can arise when disabled individuals inherit an estate. Their assets usually rise above the “limits” and benefits will cease until the inheritance is sold, spent and used up. The special needs trust allows you to protect your loved one’s benefits while supplementing their needs. The trust is merely a container used to hold property and money that will supplement your loved one’s government benefits-whether they are Supplemental Security Income, Medicaid or another program.
These programs have limits to what a disabled person’s income and total assets must be. A person must have less than $600-$800 of monthly income and less than $2,000 worth of total liquid assets. If a disabled person’s income or assets rises above those limits then their income and health care they receive from those government programs will cease. Fortunately, special needs trusts are a widely accepted and legal estate planning tool that will allow a disabled person to use their inheritance as a supplement for their special needs. The disabled person cannot be the trustee of the trust. I usually recommend a corporate trustee as following special needs trusts can be complicated. There are many rules to follow to ensure the trust operates properly and benefits are not lost.
Special needs trusts are very complicated to draft. It is a good idea to use your entire team of estate planning professionals (life insurance agents, financial planners, accountants, corporate trustees and attorneys) to ensure you are making the right decision. As always, please do not ever hesitate to contact me to discuss this and any other estate planning need or goal.
Kris Boyd; (501) 372-1616; kris@krismboyd.com
1! Ha, ha, ha...
I give out a lot of advice and pointers on what to plan for and what to include in your estate plan. I wanted to change it up a little and help families avoid the mistakes that can lead to disasters in the future. There is nothing worse than thinking you have your planning in place which takes care of everyone you love and then realizing it is worthless.
#1. The Total Package
The number one mistake planners make is having a will only and thinking that is all they need. A will is only one part of a complete estate plan. Trusts, power of attorneys, living wills and memorial plans round out a complete estate plan.
#2. The Do-It-Yourself Kit
I have re-written numerous estate plans for families after they paid money for a do-it-yourself kit bought off of the internet or at a bookstore only to realize it did not take care of their needs. Every state has different laws and these kits will not always create documents that will stand up to attack in your state. Furthermore, they are designed only to handle the simplest of estates. I have yet to see one take care of a situation in a blended family where both parents are divorced, have children together and children from a previous marriage.
#3. Hiring The Wrong Professional
You would not hire an electrician to handle your plumbing problems. Be sure you do your research and hire an attorney who focuses in estate planning. Estate planning laws are fluid. Bankruptcy laws are as well. You would NOT want to hire me as your bankruptcy attorney.
#4. One Trust Fits All
Trusts are very important estate planning tools. However, trusts are not appropriate for all families and situations. Avoid the estate planner who suggests a trust every time. Also, avoid the estate planner who charges a flat rate for trusts. Some trusts take an hour to create while others can take many, many hours.
#5. Trusts for Minor Children
Trusts are very appropriate for families with minor children and minor grandchildren. Minors cannot legally own anything. The guardian of the minor ends up “owning” the property and money. This can lead to problems in and of itself. Also, most families do not want to ”dump” a large amount of money on an 18 year old. I know I probably would not have saved much of it when I was 18 if several hundred thousand dollars fell into my lap. I would have driven a really cool Lamborgini, though.
#6. Not Declaring Guardians for Your Children
Most families do not realize that you can declare who you want to take care of your chidren if something were to happen to both parents. This is one of the most important decisions you will ever make. Do not exclude it from your planning.
#7. Designate Your Beneficiaries
All of your accounts (banking, investment, retirement and life insurance) have beneficiary designations that you need to complete. You state where you want your money to go to. These accounts will avoid probate if you take care of the beneficiary designations. You can even designate the money to go to your trust if you are leaving it to a minor child or grandchild.
This list could have been entitled “100 Estate Planning Mistakes You Do Not Want To Make”. That would have been a tough read, but it hammers the point home that you need to meet with the proper estate planning attorney to ensure that your plan is exactly what you need.
A common question that I receive from clients is “I was told I need to get a guardianship. What is that?”
Here is a great article from Larry Deason about ensuring that your baby is taken care if something were to happen to you.
A qualified estate planning attorney, who focuses his or her practice in estate planning, can help you put together a comprehensive plan that will care for you and your child in the event of your incapacity or even your death. Protect yourself and your baby from the unexpected. Call and schedule an appointment with an estate planning attorney today. You’ll sleep better once you do … at least when the baby lets you!
http://www.yumasun.com/articles/child-61399-health-guardian.html
Summertime means vacation. Lots of vacations involve the children and, also, many times the children get to stay with the grandparents when the parents go on vacation. Make sure that you have a Power of Attorney drawn up to allow thsoe grandparents to make a medical decision and/or to consent to treatment if one of your children were to need medical attention. The medical provider would have to track you down (wherever you are at) and receive permission from you in order to treat your child if you do not have a Power of Attorney in place.
I draft temporary Power of Attorneys for my existing clients at no charge and only charge $50 for new clients. It is an essential document that ensure needed medical attention is not delayed. When you are making that vacation checklist this summer: sunscreen, swimsuit, sunglasses, book… don’t forget Power of Attorney.
