It’s not uncommon for billionaires to give up some of their money to charity, but some give a lot more than others to causes close to their hearts. The Giving Pledge, championed by Warren Buffett and Bill & Melinda Gates, invites the world’s wealthiest to pledge more than half of their wealth to charitable causes either during their lives or in their wills.  As of this year, 186 ultra high-net worth individuals have joined the effort, with many promising to allocate more than 99% of their wealth to philanthropy. 
Last year, the 5 most generous individuals and couples gave away a combined $14.7 billion. Here are some of the more notable pledgers and what causes they support.
Microsoft cofounder Paul Allen, funds invaluable scientific research through the Allen Institute for Brain Science. Allen established the Allen Institute for Brain Science, which studies the genetic causes of brain diseases and disorders. As of 2015, Allen has donated $2 billion to charity.
Warren Buffett pledged to give away more than 99% of his riches and has already donated over $21.5 billion. Buffett noted in his pledge letter that “about 20% of my shares (in Berkshire Hathaway stock) have been distributed” to various charities and he will continue to distribute another 4% of his stock every year.
Bill and Melinda Gates are champions in eradicating preventable diseases. Bill Gates and his wife Melinda gave away more money than anyone else last year, donating $4.8 billion, according to Forbes. The Bill & Melinda Gates Foundation funds initiatives and programs around the world that support agricultural development, emergency relief, urban poverty, global health, and education. They are particularly devoted to fighting diseases that, with treatments like vaccinations, are easily preventable.
Facebook founder and CEO Mark Zuckerberg and his wife Priscilla Chan are fighting Ebola and improving San Francisco Bay-area public schools. Mark Zuckerberg was one of the first individuals to join the Giving Pledge and donated $2 billion last year. 
No matter the amount, your generosity in gifting time and money to worthwhile causes can have a significant impact on your tax liability. While tax considerations should never drive your charitable giving, it makes sense to structure your gifting to maximize the tax benefits. If you have questions regarding your gifting or estate plan, please contact Talley LLP today.

Aretha Franklin was undoubtedly a brilliant singer, songwriter, and pianist, but she made giant estate planning mistakes that you’ll want to take heed of. Franklin, who was divorced, reportedly died without a will or a trust despite having four grown children, one of whom has special needs.

Many Americans don’t have a will or a living trust. A 2017 survey by Caring.com found that only 4 in 10 adults do. 64% of Gen Xers and 42% of boomers don’t have a will, the study noted. According to the survey’s respondents, the top reason for not establishing an estate plan was that they simply “hadn’t gotten around to it.”

One of Franklin’s lawyers, Don Wilson, said he tried to get her to create a will or trust to keep her estate private and out of probate. She never followed through.

Now not everyone will have assets worth close to Franklin’s reported $80 million estate, but the actual dollar value of your assets isn’t the point. It’s about making sure your loved ones receive what you want the way you want.

And if you have a special needs child, you might consider working with an estate lawyer to set up a special needs trust. A special needs trust, which is not subject to probate court, lets you contribute funds for your child’s benefit while enabling him or her to continue getting benefits, such as Medicaid and Security Supplemental Income, which require recipients to have no more than $2,000 in assets and limit their income.

Though your options are virtually limitless, proper estate planning -deciding on the “who, what, when, and how” and executing this with the least amount paid in taxes, legal fees and court costs possible can be a challenging and emotional affair to wrestle with alone. For more information, contact Talley LLP today.

On his award-winning series, “Parts Unknown,” the late author and culinary-travel show host Anthony Bourdain brought the world of food back to his TV audience. Through the simple act of sharing meals, he showcased both the extraordinary diversity of cultures and cuisines, as well as how much we all have in common. While Bourdain amassed a sizable fortune during his tenure as an award-winning author and TV personality, his thorough estate planning will ensure his legacy is protected and passed on to his heirs.

According to his will, Bourdain’s assets include $425,000 in cash and savings, $35,000 in a brokerage account, $250,000 and personal property and $500,000 in intangible property. While the value of Bourdain’s estate per his will may seem low, a closer look at his will reveals that it does not include the value of assets held separately by a trust created by Bourdain back in 2016, such as his image rights, future income, royalties, and real estate.

Bourdain was thorough in making provisions for Ariane Bourdain, his only child, as the bulk of his estate will pass to her. While this may have been expected, keep in mind that in 2017 Caring.com found that 60% of all Americans don’t have an estate plan. For Gen X and Millennials, currently in their child-rearing years, the numbers are even higher at 64% and 78%, respectively.

One interesting note of Bourdain’s estate plan revolves around a provision regarding his frequent flyer miles.  He left them to Ottavia Busia-Bourdain, his estranged wife, to “dispose of in accordance to what she believes to be his wishes.”  Bourdain made a career as a jet-setter, exploring both established and hole-in-the-wall culinary hotspots around the world. One can only guess how many miles he has racked up over the years.

Though your options are virtually limitless, proper estate planning -deciding on the “who, what, when, and how” and executing this with the least amount paid in taxes, legal fees and court costs possible can be a challenging and emotional affair to wrestle with alone. For more information, contact Talley LLP today.

There is little disagreement that effective decision-making is one of the most important skills we must hone to achieve success in almost every aspect of our lives. People tend to believe that their feelings don’t bias their “logical” decisions but studies have shown that emotions are critical to decision making. Estate planning is no different. No matter how you look at it, when people are involved, emotions are always going to be part of the equation. Let’s take a look at how emotions can affect your goals in estate planning.

Estate planning can be a morbid topic for many.  One of the most common emotions in estate planning is fear. Speaking about death or incapacitation and what’s going to happen once you’re gone is an unpleasant topic that people tend to avoid. Most would agree that estate planning is important, yet all too often many fail to act. Case in point, 55% of Americans don’t have a last will. Being uncomfortable or afraid of the subject can lead to two of the biggest mistakes one can make when it comes to estate planning: avoiding it all together, or not reviewing your plan often enough to account for life events that can have an effect on your estate.

While estate planning can be a stressful and emotionally-charged topic, it can also be a lengthy and overwhelming process for many. Establishing a detailed plan can take anywhere from six months to two years. The lesson being that it’s never too soon to get started. Not all estate plans for business owners or high net worth individuals are the same, and each should be customized to fit your ever-evolving individual circumstances and needs. The key is to not become overwhelmed by the process and focus on your family’s goals and desires. Some even get creative with their estate planning!

It’s not just about transferring the largest amount of money possible to heirs free of estate tax and shielding money from creditors, it is about defining and executing your legacy as well as clearly communicating it to all those involved. The most well-intentioned, technically sound plans can reap negative unintended consequences if they are not communicated clearly to the beneficiaries, and disputes can and will arise.  See our article on Robin William’s estate troubles as an example of this.

Though your options are virtually limitless, proper estate planning -deciding on the “who, what, when, and how” and executing this with the least amount paid in taxes, legal fees and court costs possible can be a challenging and emotional affair to wrestle with alone. For more information, contact Talley LLP today.

On Sunday, Federer became the oldest man to win Wimbledon when he won the tournament for a record 8th time and extended his lead in most Grand Slam titles held by a man in the Open era; he now has 19 Just as older tennis players are working longer, Americans are too. In May 2016, almost 20% of Americans 65 and older, roughly 9 million people, were employed full- or part-time, up from 4 million in 2000. Here are some things all entrepreneurs can learn from Federer’s example of career longevity and success.
Find ways to prevent burnout. Many workers don’t take all their vacation days for various reasons, but taking time off to recharge or do something that’s important to you outside of work can pay off.
After losing at Wimbledon a year ago, Federer took some time off to recover from some nagging injuries and rested for 6 months. When 2017 came around, he entered and won the year’s first Grand Slam tournament, the Australian Open. He skipped the year’s second Grand Slam event, the French Open, to give his body time to rest.
He then returned to the tour and won Wimbledon. Federer realized, as he has gotten older, that he needs to give his bodymore time to recuperate. After he won Winbledon, he told ESPN, “If I don’t play too much, I won’t be as tired and hurt.”
Use your experience to your advantage. Federer has turned his age into a positive and put his experience to work for him. When he was serving for the Wimbledon title at 5-4 in the third set, Federer said he told himself he was going to lose the set. He reasoned that he’d never won Wimbledon without losing at least one set over the two weeks. And if he won his service game, he wouldn’t have lost any sets.
When Federer mentioned this to Paul Annacone, his former coach, Annacone was surprised and said a younger Federer never would have done that. But in the end, Federer won the match and the title. The anecdote shows he has come up with new approaches to competing as he has grown older.
Those who want continued success adapt to change. Workers who fear they’re becoming obsolete can take a cue from how Federer has had to adapt to modernization. A 35-year-old Federer had to switch to a more modern tennis racket, one with a larger head size and more power. His career goals have changed too. In his early playing days, being ranked No. 1 in the world was the most important thing to him. But now he is happy to be competing at the highest level, on the world’s most famous tennis courts -winning more Grand Slam titles is a bonus.
Proper business planning is a complex and on-going effort, requiring expert counsel—a professional with knowledge and experience, familiar with the challenges that characterize an entrepreneur’s business ventures. Talley LLP shares the same entrepreneurial spirit that has helped propel our clients to their current level of success. With over 25 years’ experience helping high net worth individuals and business owners, Talley has the expertise necessary to assist entrepreneurs throughout their entire journey, from formation through succession.
A sense of uncertainty has emerged under the new administration surrounding estate planning for the year 2017. President Trump has expressed his intent to implement significant changes to U.S. tax policy. However, the degree to which those changes will occur remains ambiguous. Nevertheless, there are strategies that individuals, families and small businesses can use when faced with new issues regarding tax, wealth-transfer and business succession.
President Trump has indicated that the estate tax could be replaced with a capital gains tax at death, eliminating the current step-up in basis system. This could cause an administrative nightmare, as many investors do not have cost basis documentation (especially for assets purchased before the internet was established). Thus, it would be a good idea to begin to determine how to collect data that documents the cost basis of long-held assets.
What can entrepreneurs and families do, given all the uncertainty around the future of transfer taxes?
Planning for “if” and “when” is challenging, and estate documents should be drafted with as much flexibility as possible to account for the unknown. Documents should reflect the consequences of dying with an estate tax in place, dying when the estate tax could be repealed, and dying when the estate tax could resume (either in its current state with 2017 exemption amounts, or in an altered state, with different exemption amounts).
And then there are those non-tax strategies that people should be employing, that will not change even if tax legislation does. These strategies, such as planning for guardianship and health care decisions in the event of death or incompetence, and asset protection and management, are essential for all people, regardless of wealth. People will still need wills and trusts so their wishes are carried out and their assets are protected for future generations.
Though your options are virtually limitless, proper estate planning -deciding on the “who, what, when, and how” and executing this with the least amount paid in taxes, legal fees and court costs possible can be a challenging and emotional affair to wrestle with alone. For more information, contact Talley today.
“America’s Favorite Dad” Alan Thicke, who died suddenly in December, is at the center of a legal battle between his sons and his wife arguing over his estate. Co-trustees Brennan and Robin Thicke claim they were left with no choice but to file a petition in order to “honor the memory of their father, protect his legacy, and prevent his testamentary intentions from being undermined by avarice and overreaching of his third wife, Tanya Callau.”
In the trust, Thicke left each of his three children equal shares of a Carpinteria ranch, 75 percent of his personal effects and 60 percent of his remaining estate, according to the petition. He left Callau the ranch’s furnishings, 25 percent of his personal effects, a $500,000 life insurance policy, all of his death benefits from pensions and union memberships and 40 percent of his remaining estate. He also provided that she could live at the ranch, as long as she paid for its upkeep and maintained the property.
According to the petition filed Tuesday in L.A. County Superior Court, Thicke updated his trust regularly over the years, and the most recent iteration was signed in February 2016. It designated his brother Todd as the trustee, and left the estate in the hands of his children if Todd declined the role, which he ultimately chose to do. Brennan and Robin say Callau made no complaints about the prenuptial agreement or the estate plan at that time.
Thicke’s sons assert Callau is now changing her position after their dad’s passing, insisting that the prenup she signed is invalid and is also insisting “Marvin rights”, arguing that she had to forgo opportunities advancing her own career in order to support Alan and raising their son Carter.
Brennan and Robin Thicke are asking the court for instructions concerning the extent to which the Trust’s property is the actor’s separate property and whether Callau’s challenge to the prenup is barred because she waived her community property rights upon signing it.
Thicke’s living trust is a lesson that even though sometimes the best wills and trusts cannot avoid legal disputes, regular check-ups will make any potential disagreements less difficult, costly and drawn-out. You may have concerns or questions about the details involved in making arrangements regarding the inheritance of your estate. Talley & Company can provide the best available options to protect your legacy.  For more information, contact Talley.

Tom Brady -who earlier this month led the New England Patriots to a comeback Super Bowl victory- may be 39, but has no plans to retire before next season. He told the Fox pregame show that there was “no way” he’d retire if he won the championship: “This is the time to capitalize. I’ve worked too hard to get to this point.”

The prime of your career is most likely the best time to capitalize on your earnings. Unlike Brady, who is most likely could live quite a comfortable life if he decided to hang up his cleats and pads after winning the big game’s MVP honors, most of us need those prime-year earnings, even if you’ve topped your earnings potential.

We need those prime earning years to shore up our retirement funds. Americans ages 35 to 44 have a median balance of just about $24,000 in their 401(k)s, for ages 45 to 54 it’s $46,200 and from 55 to 64 it’s about $71,500, according to 2016 data from Vanguard. Experts say that’s far too little: Fidelity Investments recommends that by 40 you have three times your salary saved, which for the median household would be roughly $150,000; by 50 it would be six times your salary, or $300,000.

On the other hand, there may be a risk to staying at your job. For example, your performance could decline, as may be the case for Tom Brady. As Brady grows older in age, he is more likely to become injured playing football and some say he could tarnish his reputation with poor performance. A valid point, but having more championship rings than any other quarterback in NFL history (five) would most likely far outweigh any damage he could do to his legacy on the grid iron.

Most of us don’t have such options, like parlaying his success on the field into a broadcasting gig, or Brady’s bank account, so continuing to work during your prime earning years is most likely a solid strategy.

In what can be a harrowing process, many business leaders who do attempt to create an exit plan take on too many tasks by themselves. Others simply don’t start early enough to identify and prepare the right people for future roles. With so much at stake – both emotionally, financially and professionally – the key is simply to bite the bullet, start early, and be thorough. Doing so can create a smooth transition that keeps confidence strong among customers, investors, and employees. This confidence can play a major role in ensuring the success of your company’s future and enhancing your own personal legacy.

Ultra high net worth individuals (UHNWI) will transfer an estimated $3.9 trillion to the next generation over the next 10 years, enough to purchase the 10 largest companies in the world, as shown by a Wealth-X and NFP study. Considering the fact the the average UHNWI is almost 60 years old and 64% of this demographic is self-made, many will be dealing with complex estate-planning matters for the first time in the not-so-distant future. Here’s what’s at stake.

The report found that 64% of the UHNWI population (defined as those with $30 million or more in assets), created their own wealth and did not inherit it, making it likely that any given individual within this segment will be considering the transfer of significant wealth for the first time in their lives.

Without proper planning, this group could lose up to half their wealth through inheritance taxes. These assets could be subject to as much as 40 percent of their value in inheritance taxes, with state taxes ranging between zero and 16 percent.

The question is whether UHNWI and their heirs will be prepared. To keep any fortune intact as the baton is passed, effective estate planning has to be a top priority—and early on—to accommodate various types of asset holdings.

For example, private businesses make up the largest category of wealth from HNWI in this study, at 36% of total value. This means decisions need to be made about whether these businesses will be transferred or sold, and succession plans need to be implemented—a process that doesn’t happen overnight.

Other assets such as public holdings (24 percent), cash (34 percent) and real estate (6 percent) require additional tactics for preservation. Philanthropic transfers make up yet another category of planning.

Successful wealth transfer is an effort that doesn’t rest on the shoulders of the affluent individual alone. Educating the future generation and discussing options with knowledgeable advisors are essential to building a strong financial legacy.

And while the UHNWI from this report have enough at stake to warrant immediate attention, so does any family with a business, real estate holdings, household property, liquid savings, or stock investments. Whether your assets make up part of the $3.9 trillion to be transferred over the next decade or not, the only way to make sure more of your money goes to the people and causes you’d prefer to have it (over the IRS) is to plan for it with your advisors.

Source: www.wealthx.com September 15, 2016

The battle between Michael Jackson and the Internal Revenue Service over what the late entertainer owes rages on. In the years after his death in 2009, Jackson has experienced what some might call a commercial rebirth thanks to the savvy executors who have managed the late musical artist’s assets. Now the IRS wants its fair share, claiming the value of Jackson’s name and image upon death amounted to more than $434 million. The estates own valuation? Only $2,105.

It doesn’t take an estate tax specialist to notice that’s an enormous discrepancy. The stakes will most likely be even higher when it goes to trail at a Los Angeles tax tribunal in 2017. With interest and penalties, the case could be worth more than an estimated $1 billion. 

Howard Weitzman, the estate’s lead attorney, claims the IRS hasn’t explained how its independent auditor determined the valuation of Jackson’s Estate. Executors John Branca and John McClain oversaw a remarkable turnaround after Jackson’s untimely death, eliminating his debt and making enough revenue to generate roughly $100 million in tax payments since his passing. Weitzman estimates that Jackson earned no more than $50 million from the licensing of his name and image was alive, even during his prime “Thriller” days.

What is at issue between the IRS and the estate, is the value of Jackson’s name and likeness at the time of his death, not after his executors worked their magic. Given that this may very well be the first time the IRS is pursuing estate taxes for name and likeness, it’s hard to say how the proposition that many entertainers are more valuable (in an purely economic sense) dead than alive will factor into the outcome of this landmark estate case.

Getting agreement from the IRS on an estate’s value doesn’t just affect the likes of pop stars and celebrities. It’s true very few of us deal will have to deal with the marketability of our name and likenesses after death. -But even so, making sure appraisals of stocks, real estate, businesses, or any other more tangible assets are defensible can make all the difference when it comes to sailing swiftly through a potential audit – and maybe even avoiding one altogether.


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