Estate Planning Lessons From Celebrity Cases

2010 saw the creation and continuation of court fights over deceased celebrities’ estates. To prevent similar fights over you own estate, you should familiarize yourself with 2011 tax laws, review and update your estate planning documents, and beware of financial exploitation.

The 2011 estate, gift, and GST exemptions are $5 million for individuals and $10 million for married couples.  After that, transfers are taxed at a top rate of 35%.  The annual gift exclusion is $13,000 per year, and gifts of tuition and medical care payments are still exempt.

Reviewing and updating documents, such as wills, trusts, and powers of attorney are important components of estate planning. As I previously blogged, Gary Coleman’s story demonstrates the repercussions of failing to do so. Now, Coleman’s ex-wife is fighting for the portion of Coleman’s estate that he left her in a handwritten codicil he created prior to their divorce. Brittany Murphy, on the other hand, carefully updated her will and trust prior to her death, which spared her mother and husband legal battles over intent.

It is also important to be wary of financial exploitation. Exploitation of individuals sixty-five and older is a growing epidemic, and with 2.5 million baby boomers turning sixty-five this year, there is cause for concern. Famous cases involving allegations of exploitation include the continuing legal battles of the estate of Anna Nicole Smith, and the two lawsuits involving Farrah Fawcett’s trust.

See Andrew Mayoras & Danielle Mayoras, Estate Tax Lessons From George Steinbrenner, Gary Coleman And More, Forbes, Feb. 4, 2011.

Special thanks to Jim Hillhouse (WealthCounsel) for bringing this to my attention.