Many recent celebrity deaths have shown the importance of proper estate planning. Most of the time, a parent creates a trust for his or her children to help secure their futures, and this has the added benefit of providing privacy for the children. Robin Williams set up a trust for his three children, but one of the trustees had to petition the court to appoint another trustee because the other original trustee passed away. This brought the documents into the public eye, eliminating any of the privacy that the documents created.
The IRS taxes any inheritance over a certain amount received by a single person, but they do allow unlimited inheritance to a spouse without taxing it. Upon Phillip Seymour Hoffman’s death, his longtime partner and mother of his children received his entire estate, but they never married. This placed the entire estate into probate, which may have resulted in a reduction in the value of the estate.
In many cases, such as with Michael Crichton and Casey Kasem, a person may remarry after creating an estate plan. In both of these situations, it created tension between the new spouse and the children from previous relationships because the plans did not account for the new family.
An important aspect of estate planning is ensuring that all of the documents are up-to-date times because outdated documents may interfere with the execution of an estate. In the event of any major changes, such as marriage or divorce, the birth of a child, the death of a loved one or changes in employment or business ownership, it may be beneficial review all estate documents and revise them accordingly. This can help prevent many of the issues like those that the celebrities’ families experienced.
Source: Forbes, “Lessons Celebrities Can Teach Retirees About Estate Planning“, Thomas and Robert Fross, September 16, 2014