Most New Jersey television and film fans heard about the recent death of actor Phillip Seymour Hoffman. Not only was his death a cautionary tale for the entertainment industry but also for the estate planning industry. The way Hoffman's estate plan was done back in 2004 highlights some common mistakes.
Hoffman's estate is worth somewhere in the neighborhood of $35 million. The actor did set up a trust for his oldest child, and the remainder of his estate goes to his other children and their mother -- his partner of many years. Since the couple was never married, she does not have the option of using the unlimited marital deduction available to married couples. Therefore, estate taxes reaching as high as 40 percent will be due on the amount inherited.
Additional trusts, other than the one for his son, could have saved the remainder of his estate from at least some estate taxes and from going through probate. Trusts also would have kept the details of his estate private. Trusts provide a plethora of other controls as well, such as when and how monies and assets from the trust are distributed.
Even without these shortcomings, Hoffman's estate planning could have benefited from some updating. After he executed his will, he had more children, but his estate plan was not updated to reflect those new additions. This could cause some additional steps to be taken by his surviving partner in order to ensure all of the children are adequately provided for from his estate.
When a New Jersey resident considers an estate plan, several issues require consideration before drafting and executing documents. A variety of family circumstances can be accounted for in estate planning. Documents can be tailor-made for those circumstances and can be updated when necessary to account for any changes desired by an individual to account for major life events.
Source: dailyfinance.com, Philip Seymour Hoffman's 3 Biggest Estate Planning Mistakes, Dan Caplinger, Feb. 25, 2014