Residents across New Jersey were likely saddened by the recent death of famed actor Philip Seymour Hoffman. As tragic as his death was, however, it brought many important topics to light. Most recently, it is his will that has sparked some interesting dicussions. Sources suggest that Hoffman's estate plan proved to be inadequate in a few different ways that significantly affected how his assets and wealth will be distributed.
Issues related to estate plans and wills are not often discussed in news headlines, which can make it easy for people to ignore the subject or assume it is not a big deal. However, a situation like this can remind us all that there are some crucial steps that can be taken in order to ensure our wishes are carried out and our loved ones are taken care of.
Reports have highlighted at least a few different reasons that Hoffman's estate planning may have fallen short. To begin with, he had not updated his will since 2004. At the time, Hoffman was not married but had one child. In that will, he left the bulk of his $35 million estate to the mother of his child and longtime companion Mimi O'Donnell, and had set up a trust for his son. But since then, Hoffman had two more children with O'Donnell. Because his second and third children are not addressed in the will, it may be difficult to figure out what they may be entitled to.
Second, because Hoffman and O'Donnell never married, there are certain tax deductions that O'Donnell does not qualify for. This may not seem like a significant issue, but in this case, O'Donnell could be required to pay as much as $12 million to the Internal Revenue Service in estate taxes.
Another misstep that was made in Hoffman's estate plan was the failure to use trusts more effectively. Because of this, the details of Hoffman's estate were made public. Had there been revocable trusts in place, for instance, the details of his estate could have been kept private.
These issues can be easily avoided with some effective estate planning tools and resources. By speaking with a an attorney, people who are putting together an estate plan can avoid situations like leaving family members out of a will, requiring loved ones to pay huge amounts in taxes or putting them through a public ordeal.
Source: Daily Finance, "Philip Seymour Hoffman's 3 Biggest Estate Planning Mistakes," Dan Caplinger, Feb. 25, 2014