This week’s CBTV show is entitled, “Financial Blunders of the Rich and Famous.”
Everyone likes to hear how the rich and famous messed up their lives (that’s why the tabloids sell so many newspapers), but there is a real lesson to be learned with this one.
Christmas Day is now less than a month away, and this year will mark the fifth anniversary of the passing of the man known as the “Godfather of Soul,” James Brown. Unfortunately, the legal team of the former, “hardest-working man in show business” continues to work hard themselves, as they attempt to fulfill his dying wishes, with the extremely poor estate planning documents he had in place prior to his death. Nearly five years later, a final resolution of his estate is yet to be determined in probate court, mostly due to a controversial 4th marriage, and an appeal of a 2009 settlement filed by two of Brown’s former trustees. The appeal is currently waiting on the South Carolina Supreme Court, while his remains also wait for a final resting place.
James Brown died on December 25, 2006, and shortly thereafter his heirs started fighting over his assets. The original value of Brown’s estate was estimated to be worth $100 million dollars, and he wanted all of the money to go into a “special trust” to provide college scholarships for underprivileged children. However, none of those children have seen a penny so far, because he didn’t update his will or trust during a questionable marriage to his last wife, Tomi Rae Hynie.
While Brown’s case is certainly one of the worst, in terms of what can happen due to a lack of proper estate planning, he is definitely not the only celebrity to make the same mistake. Last year, the children of former St. Louis Rams owner, Georgia Frontiere, who died in January of 2008, were forced to sell their 60% stake in the team, to pay for the huge estate tax bill that was due. Nearly a decade earlier, the family of former Miami Dolphins founder, Joe Robbie, was faced with a similar problem when he passed away in 1990. The Dolphins were sold to minority owner, Wayne Huizenga in 1993, so they could pay a reported $47 million dollars in estate taxes.
And now for some good news:
Steve Jobs was one of the co-founders of Apple, and went on to become one of the richest men in the world. Forbes estimated his wealth at $7 billion dollars shortly after his death on October 5th of pancreatic cancer. However, his legacy will live on through proper estate planning and the trusts he established. Jobs placed at least three properties into trusts in 2009, according to Reuters, which helped his family to minimize estate taxes and keep these assets from being publicly disclosed in probate court.
A Living Trust is an important estate planning document to consider. So, here are the 4 main benefits of a Living Trust:
1) Protection: There are certain cases when beneficiaries are simply too young or immature, to handle the financial responsibilities associated with property or money that will be passed down to them. A living trust allows you to dictate when and how much of their share of the estate will be given to them.
2) Management: If for some reason you become seriously ill or incapacitated and can no longer manage your financial assets or property, a living trust will allow your successor trustee to take over in your place. There is no court supervision, and the management of your financial affairs continues without interruption. However, this can only be done as long as those assets are in the name of your trust.
3) Savings: Beneficiaries of a living trust may also be able to minimize the estate taxes due with a living trust, but there are also additional savings. For example, you can avoid many of the legal fees associated with probating a will, and the time it takes to administer your estate can also be reduced.
4) Privacy: Probate is a public process that reveals all of the contents of your will, as well as who your beneficiaries are, and how much money or assets they will inherit. A living trust is a private document that does not get filed with the probate court, and does not allow anyone to view it, unless the grantor or trustee gives them permission.
A living trust is a valuable component of a comprehensive estate plan. No one has a “contact with life,” so to avoid the same financial blunders of the rich and famous, take action now to insure your wishes become a reality!
Again, I would like to hear from you about this topic. Do you think that celebrities think they can take care of important financial matters in the future so they procrastinate like the rest of us? Or do you think they believe everything is already taken care of, as is?
Until next week, Dump Debt, Invest Wisely, Believe in Yourself and Make it Happen!
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