Sometimes, the mistakes regarding an estate plan for a Florida resident are not known until death. This is also the case with recently deceased actor Phillip Seymour Hoffman, whose estate planning mistakes may shock his family.
Phillip Seymour Hoffman began his estate plan with integral documents. He executed his will in 2004. He had a trust that was established to provide for his only child at the time and his romantic partner and mother of his child. However, his poorly constructed estate plan could lead to his $35 million fortune subjected to a 40 percent tax. One of the basic mistakes that Hoffman made was not marrying his partner. If the two had been married, estate tax laws provide for an unlimited marital deduction. Now, only about $5.34 million of his estate will be free from estate taxes while the remaining wealth will be subjected to the high tax rate. Marriage could have provided for about $12 million going back to his family instead of the government.
Another mistake that Hoffman made was not using revocable trusts, which keep provisions to an estate private and out of the public eye. Many individuals choose to transfer remaining assets into an existing trust upon their death. This prevents the media from knowing the details of the estate and will. Finally, Hoffman failed to update his estate plan. He had two children after he signed the will. While he specifically provided for his eldest child, it is not clear whether the three children will be treated the same.
An estate planning attorney may be able to help individuals who wish to avoid estate planning mistakes. Through the hiring of an attorney, these individuals may be able to have their will updated. Alternatively, they may be able to have certain provisions added to their will to properly provide for their heirs.
Source: Daily Finance, “Philip Seymour Hoffman’s 3 Biggest Estate Planning Mistakes”, Dan Caplinger, February 25, 2014