California residents who are estate planning may be able to learn from the mistakes of various celebrities. An estate plan isn't only for the elderly or people with known health problems. Unfortunately, death, disability and illness can and do strike at any time.
James Gandolfini began estate planning shortly before going on vacation with his son at the age of 51. The plan was never completed, however, because the actor suffered a fatal heart attack during travel. As a result, more than half of his $75 million estate was lost to taxes. Similarly, Heath Ledger died at 28 years old. The actor failed to update his estate plan following the birth of his daughter only a few months earlier, which led to a court battle over distribution of his assets.
Michael Jackson's estate was in significant debt when he died, but it earned hundreds of millions of dollars thereafter. Jackson's error was that he failed to transfer assets into the trust, which means that his extensive wealth didn't enjoy the protections the trust was designed to provide. Jerry Garcia appointed his wife as heir and beneficiary, which created a conflict of interest. These are only a few battles over celebrity estates that have hit the news in recent years. The best way to avoid disputes after a person passes away and to protect assets for heirs is to create a comprehensive estate plan before it is too late.
A local estate planning attorney may be able to help determine whether a will, trust or both would best fit a client's stated needs. It might also be possible for an attorney to seek ways to reduce taxes on the estate and to act as executor of the estate when the time comes.
Source: The North Bay Business Journal, "Celebrity estate plans, the good, bad and ugly," Emily Menjou, Jan. 26, 2015