Five estate-planning lessons from the stars.
All is not necessarily fair in love, war, and estate litigation.
When a lot of money is at stake, as in the case of celebrity wills and estates, conflict is often inevitable. Estate-planning mishaps, however, can happen to any of us, not just the rich and famous. Wills can be contested, and well-meaning plans can crumble in the face of unplanned-for events. And while we can’t name names, here are five lessons that can be learned from problem-plagued celebrity estates as you plan your own estate.
- If you want your will to remain private, create a trust.
When a will goes into probate—the legal process of administering the estate of the deceased person—it becomes part of the public record. (That’s why we know all the finer details of celebrity estate wars.) However, if you create a living trust, you can avoid probate and keep your estate private. Even if your estate is small, you can create a trust. The costs of creating a trust depend on the type you create. You will still write a will, with the will stating that your estate is in the trust. Your attorney can help you create a trust.
- Factor life insurance into your estate—your beneficiaries may not be subject to federal income taxes.
Plus, assets that pass by operation of law, such as life insurance, annuities, and retirement plans, avoid probate.
- Gifts today mean fewer taxes later.
Some people choose to give their wealth to their heirs during their lifetime so the gifts avoid probate. Making nontaxable gifts (up to $14,000 per recipient, per year in 2017) can also reduce eventual federal estate taxes.
- Make your estate as equitable as possible.
Celebrities often have multiple marriages and children of different ages from different marriages. Their estates can be fraught with potential problems. But celebrities are not the only people with blended families and multiple responsibilities. Avoid conflict by providing for former spouses as agreed upon, and appoint an independent fiduciary or trustee to resolve arguments. Make sure your intentions are well documented, so your heirs know who is getting what, and, if there are inequalities, they understand why.
- Consider everyone who relies on you for support.
Setting up trusts that pay out in the future, can help continue your legacy if you have young children. But people sometimes forget others, such as elderly parents, whom they expect to outlive. Consider your beneficiaries and heirs carefully, and update your will as your life changes.
A New York Life agent will be happy to meet with you to discuss your life insurance and retirement needs. Neither New York Life Insurance Company nor its agents or affiliates provide tax or legal advice. Please be sure to consult with your tax or legal advisor.