The list of reasons of why people either don’t have an estate plan or they haven’t updated it in a while can go on forever. For a lot of people in Lee County, having an estate plan can be uncomfortable because they don’t want to discuss their own death. For others, it can simply be a matter of laziness. Still, others who have a plan fail to ever get around to updating it. However, that can be a big a mistake.
The death of actor Philip Seymour Hoffman earlier this year and the eventual discovery of his outdated estate plan has raised many questions. For example, because Mr. Hoffman left things the way he did, his heirs will pay a $15 million tax penalty thus cutting their inheritance from $35 million to $20 million. Mr. Hoffman also apparently did not leave any money for his children and instead left it all to his partner, Marianne O’Donnell.
There are many lessons to be learned from Mr. Hoffman’s decisions, including the lesson that marriage is important when it comes to inheritance. Because they were not married, Ms. O’Donnell will have to pay tax on any amount above the $5.34 million exemption. Another important lesson is to avoid letting one’s will go to probate. It can be costly and time consuming. Also, a person should make sure that everyone whom he or she wants included in his or plan, especially children is spoken for.
Have you considered your estate plan recently? Are there any important changes that you know you should probably make, but have yet to do so? If you answered yes then it’s probably time to update your estate plan, or start one if you haven’t already. If you need help then consider meeting with an experienced estate-planning attorney.
Source: Forbes, “New clues in Philip Seymour Hoffman's costly estate plan,” Robert W. Wood, July 22, 2014.