Eleven Celebrity Estate Planning Lessons
From: www.wealthmanagement.com
Appreciating their mistakes can help you better serve your clients.
Celebrities often do a great job accumulating wealth during their lives only to allow it all to slip away after their deaths with improper (or none at all) estate planning.
Though there’s an undeniable element of schadenfreude that makes these disaster stories ghoulishly enjoyable, there are also important lessons to be learned. The problems experienced by celebrity estates are often the very same ones that trip up more typical clients, simply writ larger.
Because many of these concepts and dangers can be difficult to even broach with clients, being able to utilize some of the more “bombastic” examples provided by celebrities can help break the ice and better get the potential dangers across to clients who might otherwise zone out once the “boring” topic of estate planning comes up. Some chocolate to help the pill go down so to speak.
Here are 11 valuable lessons practitioners can learn from celebrity estate planning mistakes:
1. James Gandolfini: Take Advantage of the Marital Deduction
The actor and producer most known for his role as mafia boss Tony Soprano didn’t slip anything by the IRS in real life. When Gandolfini died in June 2013, his will left $1.6 million to various friends and relatives, and bequeathed land and property in Italy to his kids (this element has its own issues). The rest of the estate was divided so that 30 percent went to each of his two sisters, 20 percent to his wife and 20 percent to his daughter.
Setting up the estate that way failed to take advantage of tax incentives for the surviving spouse, namely that by giving the entire amount to his wife, it could have transferred tax free. Granted, Gandolfini may have been concerned that his current wife wasn’t the mother of all of his children, which is reasonable. However, even in that case, proper trust planning could have been employed to allow him to take both the advantage of the spousal exemption and to ensure that his kids got exactly what he wanted them to inherit.
Taxes and fees on the legacy ultimately amounted to about 55 percent of Gandolfini’s total net worth.
