The New Haven (CT) Register’s recent article, “Even celebrities fail at estate planning,” acknowledges that while your passing might not be front page news, if you have significant wealth or several heirs, you should try to leave an orderly estate. This is especially important in states like Connecticut, where residents must be certain that their financial planning includes estate planning. This is because it’s one of the states with a state estate tax that has a lower exemption than the federal rate.
There are 14 states and Washington, D.C. that impose an estate tax that’s separate from the federal estate tax. The federal “death tax” is an astronomical 40%, but applies only to assets above the federal exemption of $5.49 million (2017). For example, in Connecticut, the state starts imposing its estate tax on assets exceeding $2 million.
You’d think that celebrities who have considerable wealth would make certain to include estate planning in their personal finance plan. They can easily afford to engage a team of attorneys and advisers. But many fail to do so. This only shows how common it is for high net worth individuals to neglect estate planning.
Prince: The musician died in April 2016 at the age of 57, but he didn’t prepare a will. A judge will decide how to distribute the $300 million estate.
Heath Ledger: The actor who died unexpectedly in 2008 at age 28 left a will—but he didn’t update it when his daughter was born in 2005. This caused confusion over heirs and possible legal battles, but Ledger’s family did gift the entire estate to his daughter.
Warren Burger: You would think the former chief justice of the U.S. Supreme Court would know how to take care of his legal obligations. But when he died in 1995, he left behind a one-page will that he typed himself. That document was poorly worded and left his family susceptible to a $450,000 estate tax bill and court fees that wouldn’t have been imposed, if he had hired an estate planning attorney to create a trust.
Estate planning is a complex area of law. If you have a high net worth, you should hire a qualified attorney, along with a Certified Financial Planner® practitioner and a CPA. It’s good to gain the perspective of all of your professional team members to produce better outcomes for you and your family. Trying to do it alone may not get you in the newspapers, but it could make for unnecessary stress and expenses for your heirs.
Reference: New Haven (CT) Register (June 24, 2017) “Even celebrities fail at estate planning”
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