Believe it or not, estate planning even shows up in the news.
From disastrous stories of estate planning gone wrong, to current stories of estate plan strategy, here are highlights of estate planning news I’ve found interesting.
Where are your assets going when you pass away? While making plans to pass your wealth on to your family seems wise, it’s surprisingly overlooked by countless people until it’s too late. In the absence of estate plans, many families are left scrambling and uncertain as to what will become of their loved one’s financial legacy.
The benefits of estate planning aren’t just a matter of inheritance either. Estate plans can often be used as strategic financial tools while you’re living!
Another Associate Drops Claims on Tony Hsieh's Estate
One of the most notable estate planning disasters of recent years has been the case of late Zappos CEO Tony Hsieh. When Hsieh died unexpectedly in the aftermath of a fire in November of 2020, he left behind no estate plans or guidance for the management of his $500-$800 million+ fortune.
It was not long before a whopping $130 million in claims had been made on his estate by various associates. One claim even demanded $12 million based on a business arrangement written on a sticky note! Fortunately for Hsieh’s family, several of these claims have recently been withdrawn; Justin Weniger/1122 Holdings is the most recent, having withdrawn their claim to 27.7% of the Hsieh-backed music festival ‘Life is Beautiful’.
Sanctioned Russian Oligarch, Alisher Usmanov, the 5th Richest Person in Russia, Previously Transferred His Assets to Trusts
This article from Business Insider caught my eye. While the EU, and governments including the U.S., U.K. and Switzerland, have scrambled to freeze the assets of Russian oligarch Alisher Usmanov, Usmanov’s estate plans have kept most of his assets out of government reach.
With a net worth estimated at nearly $19 billion, Usmanov is expected to have significantly valuable assets, and indeed has been linked to the ownership of mansions (two of which are located in the U.K.) and a superyacht. Authorities found, however, that Usmanov had moved his estate into an irrevocable trust in 2006, essentially transferring ownership of his property and donating the rights to family.
While this is a very large-scale example, strategies like this can be used by anyone to protect assets like family homes.
Smaldino vs. Commissioner of Internal Revenue: A Case of Estate Planning Gone Wrong
In this recent tax case, we see the disastrous result of some hasty decision making. Mr. and Mrs. Smaldino hold a real estate portfolio worth around $80 million, keeping the rentals in many separate LLCs to disperse risk. They also had an estate plan in place called a Dynasty Trust for a percentage of the interests (to benefit children and grandchildren). This is an irrevocable trust that is a common and often advisable strategic tool.
The problem arose when Mr. Smaldino “purportedly” (in the words of the court) gifted around 41% of the member interests to his wife, for her to then gift to the Dynasty Trust. The court, unconvinced of the intent of the gift, re-characterized the transfer as if Smaldino had made it directly to the Dynasty Trust, heavily increasing the family’s tax liability.
This is an example of how a couple of skipped legal steps, a lack of articulated intent/communication, and haste resulted in significant financial losses. These are the kinds of missteps that a lawyer can help you prevent!
Kobe Bryant's Estate to Reportedly Get $400 Million Following Sale of BodyArmor to Coca-Cola
Kobe and Gianna Bryant’s untimely and tragic death in 2020 was one of the heartaches of an already difficult year. And although Kobe had estate plans in place, a couple of delays and oversights resulted in big challenges for the family.
The good news is that Kobe Bryant’s estate plans have allowed his family to benefit from many of his past business deals. The biggest and most recent of these deals is a deal to sell BodyArmor to Coca-Cola, marking the biggest acquisition in the company’s history. As a 10% owner of BodyArmor, Kobe’s estate will receive $400 million from the sale!
What Estate Planning News Have You Seen?
Wild stories of estate plans, whether successful or messy, are everywhere. From Aretha Franklin’s poor estate planning to the recent IP fight between Prince and Morris Day, many celebrities have made headlines (often posthumously) over their estates.
What are some estate plan headlines you remember seeing over the years?
Remember, if you haven’t made your own estate plans, you may be leaving your loved ones in a vulnerable situation. A bit of foresight and careful planning makes a world of difference when you’re gone or incapacitated. Get in touch with us today to discuss how to prepare for your family’s future!