Fairfax, VA (Law Firm Newswire) September 21, 2017 – Philip Seymour Hoffman, a famous actor, died in 2014, and left behind his girlfriend, Mimi O'Donnell, and their three children, ages 10, seven and five. Because he did not wish to have “trust fund kids,” he had a will in which he left his estate, which was worth $35 million, to his girlfriend, who was to take care of their children.
However, the lack of estate planning resulted in his estate incurring an estate tax in the amount of about $12 million. Had Hoffman married Mimi, his family would have realized savings of approximately $12 million and not owed any estate tax. Hoffman also stated that funds were to be applied toward his kids’ travels to major metropolitan areas, including New York, Chicago and San Francisco, for the sole purpose of exposing them to the arts, culture and architecture that those cities have to offer.
Virginia estate planning attorney Lisa McDevitt says, “The importance of proper estate planning cannot be overlooked.” “By consulting an estate planning attorney, individuals and their families can realize significant tax savings, and can avoid claims to their assets by creditors and other interested parties.”
Had Hoffman consulted with an estate planning attorney, his children would have received any percentage of assets that would have been bequeathed to them once they reached age 18. Estate planning could have been used by Hoffman to minimize or avoid tax liabilities upon his death.
However, upon completion of probate, Hoffman’s estate will be at risk after Mimi receives her bequest in the event she is the defendant in a lawsuit, her assets are pursued by creditors, or in a subsequent divorce if she marries. Her inheritance may also be diminished by a second estate tax upon her demise. The children, could also face claims to Hoffman's estate
Instead, Hoffman could have made a provision for Mimi with a Personal Asset Trust, which would have helped to shield her from divorce, lawsuits by predators and creditors, and a second estate tax on her bequest at her death. Furthermore, he could have included economic incentives to provide motivation for his children. For instance, he could have stipulated that his children receive distributions at certain ages, when they would be more likely to be sufficiently mature to handle such a large sum of money. For instance, an arrangement could have been made for them to receive one-third at age 25, one-third at age 30, and one-third at age 35.
Lisa Lane McDevitt
2155 Bonaventure Drive
Vienna, VA 22181