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Celebrities prove that wills are good, but trusts may be better

In recent years, many celebrities have passed away in what would be considered by some Massachusetts residents as well before their time. However, before they passed into Hollywood history, there was one last story to tell. Many of these celebrities' estates became public because they relied on wills alone to pass the bulk -- if not all -- of their estates.

James Gandolfini may be the most shocking example of someone with a high net worth leaving heirs to pay millions of dollars in taxes since he only had a will. Of his estimated $70 million estate, the IRS inherited nearly $30 million. Even so, taxes may not have been the focus of his estate plan. Leaving a sizable inheritance to his sister may have cost her significant taxes regardless.

Phillip Seymour Hoffman only mentioned one of his children in his will, but he had two more children with his longtime partner and neither of them was mentioned in his will. Many wills have a clause that covers future births, but somehow, his will did not. Further, since he and the mother of his children were not married, she will more than likely owe a substantial amount of taxes on his estate since she is not eligible for unlimited, tax-free transfers.

The public knows all of this because these actors did not use trusts, whose details are kept out of the public eye, to pass on their estate to their heirs and beneficiaries. Wills are important certainly, but other estate planning documents can enhance a Massachusetts individual's ability to efficiently pass his or her estate according to his or her wishes, yet limit the tax liability of the beneficiary. Without careful planning, a person can inadvertently sabotage his or her own wishes to provide for those he or she loves.

Source: Forbes, 7 Tips From Philip Seymour Hoffman, Gandolfini, & Other Celeb Estates, Robert W. Wood, Feb. 23, 2014

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