Recently, I read a blog post by Penn Mutual (you’ll find the original HERE) about estate planning errors made by the rich and famous.
Reading through, I was reminded that, although most of my clients are not rich and famous, there is still an imperative need for an estate plan. Rather than go through all of the celebs mentioned, I want to focus on two: Robin Williams and Whitney Houston.
Today’s post will be about Robin Williams, with Whitney coming next week.
Robin Williams had a pour-over Will and revocable Trust. While this appears to be good planning on the surface, he had several issues with his trustees (One trustee resigned, and the remaining trustee appointed someone who took the role but then later resigned). So the mistake he made was not being careful about choosing the proper trustee, and at least one appropriate back-up trustee. This is crucial if you want your estate plan to work, and I advise my clients to think this over very carefully before they choose. Even if the documents are done correctly, making a bad choice for trustee can blow everything up.
Another thing that Robin Williams got right, was having irrevocable life insurance trusts. Most of us won’t come close to the Massachusetts Estate Tax threshold of $1 Million when it comes to our assets, but MANY of us would eclipse that threshold if our life insurance were to be included in our taxable estate. Although life insurance is income tax-free, it’s not necessarily estate tax-free. For many people, especially in the case of a married couple where both spouses pass away, the life insurance puts them over the top, and Massachusetts estate taxes would be owed. Putting your life insurance into an Irrevocable Life Insurance Trust keeps the life insurance outside of the taxable estate, and can be the difference between having to pay estate tax or not.
I can’t stress enough the importance of having an experienced estate planning attorney in your corner. For more info, visit My Website.