Learning from one celebrity's estate planning woes

Philip Seymour Hoffman’s untimely death has affected many Americans very deeply. From his friends in Hollywood to his fans, from members of the drug and alcohol recovery community to anyone who can understand what it means to have one’s life unintentionally spiral suddenly out of control, Hoffman’s death is largely being perceived as a tragedy.

But of course, those who are most affected by Hoffman’s death are his family and his closest loved ones. Unfortunately, several of them are being impacted not only by his death but also numerous challenges related to his approach to estate planning. It is important for Americans across the nation to learn from Hoffman’s estate planning challenges so that they may avoid affecting their families in similar ways once they are gone.

Hoffman was devoted to costume designer Mimi O’Donnell for many years. She was the mother of their children and was his partner in life. However, Hoffman and O’Donnell never chose to marry. Before Hoffman died, he left O’Donnell his estate valuing $35 million, save for a trust set up for he and O’Donnell’s oldest child. According to Daily Finance, the fact that Hoffman and O’Donnell were not married will likely cost O’Donnell 40 percent or more of Hoffman’s estate in taxes.

Hoffman’s story should not inspire anyone to marry for the sake of tax benefits. However, O’Donnell might have been saved significant expenses had Hoffman worked with an experienced estate planning attorney to determine whether the tax-related “damage” of not being married could have been mitigated in numerous ways through alternative forms of estate planning construction.

Source: Daily Finance, “Phillip Seymour Hoffman’s 3 Biggest Estate Planning Mistakes,” Dan Caplinger, Feb. 25, 2014

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