Oscar-winning actor, Philip Seymour Hoffman, died in February from a drug overdose. Recently, his long-time girlfriend and mother of his three children, Marianne O’Donnell, filed to open Philip Seymour Hoffman’s estate and to probate his will. While there are many lessons that can be drawn from his will, there are four main estate planning pitfalls that serve as important lessons:
Create a Revocable Living Trust. Hoffman was a public figure who valued his privacy. Yet by creating a will instead of a revocable living trust, he let the world in on his private life. We all know that his son will inherit everything at 30 and we’ll also know the total size of his estate when it’s inventoried and filed with the Court, as it must be. A will is public record, so every detail is available to anyone interested enough to look it up. A revocable living trust would have allowed him to keep his private wishes private.
Update your plan. Hoffman created his will in 2004 and never updated it, so his two youngest daughters are not mentioned or provided for in the will. His estate has been valued at $35 million, and his executor is his long-time companion who is also the mother of their three children. After born children are provided for by law, but Hoffman lost out on the opportunity to specifically direct their interests.
Cover your assets. While Hoffman did create a trust for his son Cooper, naming Cooper’s mother as sole trustee, that trust will dissolve once Cooper turns 30. And all assets distribute to Cooper outright at that time. Instead, Hoffman could have created a Lifetime Asset Protection Trust that would have kept Cooper’s inheritance safe from divorce, creditors, lawsuits and bankruptcy forever PLUS provided incentive to Cooper to grow the assets of the trust rather than squander them.
Use tax-saving strategies in your estate plan. Since Hoffman was not married to his long-time companion, there will be a monster sized estate tax bill to pay, both state and federal. The use of other tax-advantaged estate planning strategies like an Irrevocable Life Insurance Trust (ILIT) would have preserved assets and resulted in more money to Hoffman’s family and less to the US Government.
To put the proper protections in place for your family, contact our office to schedule a time for us to sit down and talk. We normally charge $750 for a Family Wealth Planning Session, but because this planning is so important, I’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call today and mention this article.