To the unfamiliar, having an estate plan may seem relatively simple. One just needs to write something up saying how he or she wishes for her assets to be divided upon his or her passing and that’s it. For better or worse, the process is nowhere near that easy. In fact, the process can be exceedingly difficult when estate planning matters are improperly handled. When this happens, it can be time-consuming and costly to resolve these matters, not to mention one’s estate may not pass according to one’s wishes. For this reason, competent estate planning is recommended.
To see an example of how seemingly minor mistakes can have major consequences in this realm, one need only look to Philip Seymour Hoffman’s estate. Upon the actor’s passing in 2014, his approximately $35 million estate passed to his then girlfriend who was supposed to use the money to raise their children. The first mistake was that Hoffman and his girlfriend never married, a move which would have allowed them to avoid estate taxes. The slip-up, which may seem minor, ended up costing nearly $12 million.
The second mistake was that Hoffman utilized a will when it may have been better for him to utilize a trust. Hoffman indicated that he wanted his children to visit major cities to obtain an appreciation for the arts, but since a will requires probate, distribution of those funds may be delayed and the process will result in avoidable expenditures. In addition to setting up a trust for his children, Hoffman could have set up a trust for his girlfriend, which would have protected the assets in the event of a future divorce, lawsuits and even creditors.
Of course, those who have never spoken with an estate planning expert may never know that these options are available. This is why it is critically important to engage in estate planning early on, seeking a strategy that supports one’s best interests and desires for the future of his or her assets and beneficiaries. To learn more, these individuals can discuss their estate planning ideas with a legal professional.