Five estate planning lessons from the stars.
All is often not fair in love, war, and estate litigation.
When a lot of money is at stake, as is the case with 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 details. And while we can’t name names, here are five lessons that affected celebrity estates over the past few years and are worth learning as you plan your 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 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. Costs for creating a trust depend on the type you create. You will still write a will, but the will states 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 less taxes later.
Some people choose to give their wealth t their heirs during their lifetimes so that the gift avoids probate. Making non-taxable gifts (up to $14,000 per recipient, per year in 2013) can also reduce eventual Federal estate taxes.
- Make your estate as equitable as possible.
With multiple marriages and children of different ages from different marriages, celebrities and their estates are often fraught with potential problems. But today many people have 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 to document your intentions well so that your heirs know who is getting what, and, if there are inequalities, 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 who may rely on them for care, because they don’t expect to outlive them. Consider your beneficiaries and heirs carefully, and update your will as your life changes.
A New York Life agent would 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.