LIFE LETTER MATURE
Estate planning lessons from celebrities
It is said that human beings are one of the few species on earth with the ability to learn from other peoples' mistakes and yet are also the least likely to. We can learn valuable lessons from what people do and even more valuable lessons from what they do not do.
Following are a few examples from a recent article on wealthmanagement.com:
Build in tax efficiencies - When actor James Gandolfini passed away in 2013, he failed to take advantage of tax incentives for surviving spouses. It is estimated that this cost his estate about 55% of the total net worth.
In Canada, the effect may be less, but it is still advisable to take full advantage of the tax-free (mostly tax-postponed) spousal rollover provisions in the Income Tax Act. To further minimize the effect of taxation on an estate, adequate life insurance can be used to pay the tax bill instead of estate assets. We all have a right to pay as little income tax as legally possible. Canada Revenue Agency is under no obligation to inform anyone that they may have missed an opportunity.
Put it in writing - Marlon Brando died in 2004 with an estate plan in place. However, he had allegedly made verbal promises to his long-time housekeeper, Angela Borlaza, that werenít written into his plan. She filed two lawsuits claiming (among other things) that she had been wrongly evicted from the actor's home claiming that it was a gift from her former employer. If it isnít properly written down, it then can become a case of he said, she said. These battles can rarely be won.
Update documents - When author Michael Crichton died in 2008, he left behind a pregnant wife but failed to update his estate documents to include his unborn son. When his widow tried to include her son in the estate settlement, it was opposed by the bestselling author's daughter. This set off a very public court battle that eventually resulted in a ruling that Crichton's son could inherit.
Have a Will - Perhaps because he was only 27 when he died, Jimi Hendrix did not have a Will. Without a spouse or children, Jimi's estate reverted to his father. The real problem arose when Al Hendrix died in 2002. His Will excluded Jimi's brother, Leon Hendrix, while passing the estate and interest in Jimi Hendrix's music to Al's adopted daughter, Janie Hendrix. Leon unsuccessfully sued Janie for a piece of the pie.
Doesnít it make sense to take a little time now to save your heirs future estate grief?
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