March 7, 2014
Sadly, this isn’t the first time we’ve seen a story like acclaimed actor Philip Seymour Hoffman’s play out. Early this month, the headlines announced the lead Capote star’s premature death from an apparent drug overdose. This week, we find that as his loved ones attend to their grief, so must they contend with complicated issues arising from his poorly planned estate. Though Hoffman had thoughtfully created a will, it was over a decade old. Consequently, it not only contained gross omissions but was poorly designed to minimize the tax burden on his benefactors.
While Hoffman’s will included his son Cooper, his two daughters born after the will was made (and never amended) were effectively disinherited. New York law attempts to protect children with a special provision for this kind of scenario, but there’s no guarantee it will apply. These are not the kinds of matters you want to leave for the courts.
Then there’s the mother of Hoffman’s three children-his longtime companion Marianne O’Donnell. She will reportedly inherit Hoffman’s estate outside the money allocated for his son. Had the couple been married, O’Donnell would have received an unlimited amount tax-free. Because they weren’t, O’Donnell will hand over anywhere from $11 to $15 million in taxes if the actor’s $35 million estate figure is right. No matter how the two felt about the institution of marriage, Hoffman’s estate planners could still have mitigated some tax expenses through other strategies, including trusts and gifted amounts during his lifetime.
Celebrities may be more likely to make the news, but they are far from the only ones with poorly planned estates. We understand how periodic reviews can seem less than urgent against the barrage of all of our growing to-do lists. So what’s our best advice? Schedule a regular time with your advisory team to review your will and update your estate. Once built into your calendar, you’ll not only have peace of mind but a signed legacy of caring and responsibility your loved ones will appreciate.
So go ahead, make that appointment.