King & Wood, P.A.

Estate Planning Lessons from Celebrities

“While it can be easy to assume that celebrities would have airtight estate plans, time and time again Hollywood stars have made costly decisions that could have been easily avoided.”

Putting off making estate plans is common. However, it is also not wise. You won't know about the legal battles, tax bills, financial chaos and family stress. However, your family will. Learning from the mistakes made by famous people provides good lessons, says a recent article from CNBC, “3 end-of-life money mistakes celebrities have made—and how you can avoid them.”

Aaron Carter was very young when he died without a will, leaving behind an 11-month-old son and a fiancée. In California, the court designates the child as the sole heir when an unmarried person dies without a will. However, Carter’s son was a minor, and minors may not legally inherit assets. In this case, the court appointed a fiduciary to manage the estate.

A better way: have an estate plan created, even if it’s just a basic will. Parents of minor children should have a will to name a guardian, unless they want the court to appoint a guardian. An estate plan could also be used to care for a loved one if you aren’t married.

Another problem is created when there’s money but no estate plan. Few people want an 18-year-old child to inherit large amounts of money with no guardrails in place. A trust is an excellent way of setting terms and conditions on an inheritance, whether the parent is living or has died.

Kobe Bryant is an example of what happens when you don’t update an estate plan. When he died, he did have an estate plan. However, it hadn’t been updated to reflect the birth of his child, Capri. As a result, she wasn’t legally a beneficiary of his estate. His widow had to go to court to petition to have the daughter added to the trust.

Had the trust been updated, his widow would not have had to go through this process in the public eye.

Your estate plan needs to be updated when new family members are welcomed. The same is true for any big life event, like marriage, divorce, death, or a major financial change. Estate planning documents need to reflect the changes in your life.

James Gandolfini offers a harsh lesson in how estate planning is needed to prevent an estate from being decimated by taxes. Gandolfini had taken the time to create a will. However, no tax planning was done for his estate. His $70 million estate paid an estimated $30 million in federal and state estate taxes before making distributions to friends and relatives.

An experienced estate planning attorney will be able to review your situation and determine which strategies will work best to protect your estate and your family. Everyone needs to have an estate plan, no matter the size of your estate or how many people recognize you when you walk down the street.

Reference: CNBC (April 20, 2025) “3 end-of-life money mistakes celebrities have made—and how you can avoid them”

Why You Need an Estate Planning Attorney

“Handling legal documents without expert guidance can lead to costly mistakes, overlooked details and unintended consequences.”

It seems like some estate planning documents should be easy for a regular person to create. However, as the Greek philosopher Socrates said, “You don’t know what you don’t know.” This is especially true when it comes to estate planning, says a recent article, “9 Legal Documents You Should Never DIY—Here’s When to Call a Lawyer” from msn. If you create documents and they aren’t legally sound and enforceable, your home-made solution could cause a mess for you while living and your heirs after you’ve passed.

Healthcare Proxy. Having a healthcare proxy document prepared allows someone you trust to make medical decisions for you if you cannot. A standardized form is just that—standard—and may not reflect your personal wishes. This document is also important for parents of young children, so a person you trust can make decisions for your children if you cannot.

Power of Attorney. The POA is used to appoint a person of your choosing to handle your financial and legal affairs if you become incapacitated. The agent’s powers end upon your death. An estate planning attorney will draft one reflecting your wishes and following your state’s laws.

Living Will. This document expresses your personal medical preferences if you can’t communicate. If your medical situation is dire and you are not likely to become conscious, it provides clear guidance for long-term care. Without this document, your loved ones will be left guessing what you would have wanted.

Revocable Living Trust. Assets placed into trusts don’t go through probate, remain private and pass directly to heirs as per the instructions in the trust. An estate planning attorney will tailor the trust to your situation during life and after death.

Beneficiary Designations. When you open an investment account or purchase life insurance, you can name a beneficiary. This is the person who inherits the account or receives proceeds on your death. Many estate planning mistakes occur because people don’t update their beneficiary designations. Note that the beneficiary designation overrides any will or trust, so be sure they are correct.

Business Succession Plan. If you own a business, this blueprint will be used to direct how the business should continue when you retire or after you die. It will address issues of leadership, family ownership and your vision for the business to continue in the future. It takes several years to create a business succession plan, and your estate planning attorney will work with family members, key employees, financial officers and CPAs to ensure a smooth transition.

Last Will and Testament. This document directs how you want your property to be distributed upon your death. Without a will, known as intestacy, your estate is distributed according to the laws of your state, usually by bloodlines or kinship.

Prenuptial or Postnuptial Agreements. While these documents are used in case of a divorce, they are sometimes used to support estate planning disagreements to clarify intentions. If you come to a marriage already owning assets, or if there is a big disparity in wealth, it makes sense to have an agreement in place.

Guardian Designation. If you have minor children, your last will and testament includes a guardian named to raise your children if both parents die or become incapacitated. An attorney is needed to be sure this is properly documented. Without a will naming a guardian, a court will decide who will raise your children.

Working with an experienced estate planning attorney protects your family, finances and future. Estate planning attorneys know what you don’t—covering all bases and preventing legal complications for you and those you love.

Reference: msn (March 17, 2025) “9 Legal Documents You Should Never DIY—Here’s When to Call a Lawyer”

What Estate Planning Documents are Needed for a Smooth Transition?

“As the baby boomer generation ages, they will pass savings and assets on to their children, grandchildren and charitable organizations.”

No matter the size of the wealth you hope to pass on to the next generation, planning for wealth transfer should be done as soon as possible. It’s good to start talking and educating children about money, as early as their teenage years, says a recent article from yahoo! finance, “Multi-Generational Wealth Transfer: The Financial Records You Need for a Smooth Transition.” Conversations about financial responsibility, the children’s goals and family values can profoundly impact the family dynamic and the children’s fiscal knowledge.

You’ll also want to be sure you have all the estate planning and financial records needed for a smooth wealth transfer and access to the necessary data. Here’s what this includes:

Last Will and Testament. This document outlines how you want probate assets to be distributed after your passing. You’ll need to have an inventory of all assets and a clear picture of your finances. It’s good to review your finances and estate plan on a regular basis.

Trust Documents. While the will is a set of instructions, a trust is a legal entity used to hold assets. Those assets in trusts aren’t subject to probate, offer privacy and allow for the assets to be used in case of incapacity during your lifetime.

Healthcare Directives and Power-of-Attorney. Estate planning isn’t just about asset distribution. Everyone should have a healthcare directive and a power of attorney. If you are seriously injured in an accident, healthcare directives will be needed to allow others to be involved in your care. A power of attorney empowers a person of your choosing to make decisions on your behalf. If you don’t have these documents, your family will have to go to court and petition to obtain conservatorship or guardianship to be involved with your care and finances.

Retirement Account Statements and Tax Returns. Access to these documents will help your executor or agent figure out your financial status. Tax returns contain a wealth of information, including income, account information and potential tax liabilities.

Real Estate Deeds, Mortgages, and Titles to Cars, Boats, etc. Titles documenting ownership, deeds, vehicle registrations and mortgage and loan information will all be needed to settle your estate.

Digital Assets. Educate yourself about the importance of sharing access to digital assets, so you can prepare properly if you are incapacitated or when you die. While some platforms can assign a legacy contact, others may only be accessible by sharing the username and password information. If the asset uses third-party authentication, your executor will also need your phone or access to email to manage your accounts. Passwords and PINS should be stored with both a hard copy and online with a secure password manager.

An estate planning attorney in your community will know how to best prepare for transferring wealth, from preparing the necessary documents to exploring different strategies and guiding the process.

Reference: yahoo! finance (March 31, 2025) “Multi-Generational Wealth Transfer: The Financial Records You Need for a Smooth Transition”

Should You Worry about Your Estate Taxes?

“The biggest difference between the inheritance and estate tax is who pays.”

You'll need a will if you own property, investments, or personal possessions and wish to pass them on to loved ones. While you’re creating an estate plan, you should also consider estate and inheritance taxes and how they may impact your legacy. According to a recent article from Go Banking, “Inheritance Tax 2025: Rates, Exemptions and How to Avoid It,” your estate may owe a tax to the state government even if it doesn’t rise to the current $13.9 million federal estate exemption now in effect.

There are still states requiring heirs to pay an inheritance tax. Those living in Pennsylvania, New Jersey, Nebraska, Maryland, or Kentucky would do their heirs a kindness by planning for inheritance taxes, so loved ones aren’t surprised.

If you’re leaving an inheritance, there are a number of ways to minimize or even avoid estate and inheritance taxes. Your estate planning attorney will be able to help you determine which methods work best for your situation. Here are some options:

Gifting. In 2025, everyone can give away as much as $19,000 to as many people as they want without paying gift taxes. Married couples can double this amount, making gifts to as many people as they wish.

 You may give larger gifts to reduce the size of your taxable estate. However, they will be counted against your federal estate tax exemption. Many states don’t tax gifts made during your lifetime, especially those with inheritance taxes.

Trusts. Trusts are used to remove assets from your taxable estate, with different types of trusts used to accomplish different goals. An Irrevocable Trust will take assets out of your estate. However. you’ll need to give up control over the trust. Qualified Personal Residence Trusts (QPRTs) are used to transfer your home to beneficiaries at a lowered tax value. Bypass Trusts help married couples reduce exemptions for both spouses.

Trusts are complicated and need the experience of an estate planning attorney to make sure thay they are the right trust for your situation.

Charitable Giving. Donations to 501(c)(3) charities are exempt from both inheritance and estate taxes. There are several ways to make donations, including making donations through your will, giving while you’re alive, creating a charitable trust, or using Donor Advised Funds (DAFs).

Charitable Remainder Trusts provide an income stream to heirs for a certain period, and then the remainder goes to the charity. You might also consider a Charitable Lead Trust, where income goes to the charity for a set amount of time, then the remaining asset goes to the charity.

Meet with an experienced estate planning attorney in your area to learn your estate tax responsibilities and how to plan for them for yourself and your heirs.

Reference: Go Banking ( April 14, 2025) “Inheritance Tax 2025: Rates, Exemptions and How to Avoid It”

Fashion Designer Takes Uniquely Named Approach to Her Will

“In a recent Trading Secrets podcast, fashion designer Rebecca Minkoff revealed that she has a special provision in her trust in case she divorces or dies before her husband, Gavin Bellour.”

Get ready because this is a doozy, or more accurately, a floozy. Minkoff, founder of a global handbag and clothing empire, has a “floozy clause”—a provision in her will stating if she predeceases or divorces her husband, her assets all go into a trust for her children. This is to prevent a second spouse from gaining access to her wealth, reports the article “Fashion Designer Rebecca Minkoff Reveals She Has ‘Floozy Clause’ In Will” from mondaq.

Minkoff says her mother came up with the idea, long before she or her husband had any money. However, Minkoff counted on becoming highly successful. She maintains that she trusts her husband implicitly. She doesn’t trust what someone else might do if she dies. Her goal is to prevent her children from needing to go to court against an unscrupulous person.

While the title of this provision is admittedly unique, it’s very common for individuals to want to have specific directions carried out after their death, from wishes for the administration of their estate or distribution of assets. Some want to restrict who their beneficiaries marry or even dictate the religion of a spouse.

Another somewhat unusual provision is the Special Trustee for Hostile Acts. In one case, it was used by a mother who wanted to bring harmony to her five children’s relationship after she died. She appointed a Special Trustee to limit trust determinations to any child engaging in a hostile act. However, controlling from the grave doesn’t always work. Litigation ensued between the siblings, and the case made its way up to an Appellate Court, which upheld the provision but declined to limit the application despite the request of several of the children. This mother knew her children very well.

A provision attempting to control the religious marriage requirement can be expected to be enforced if it doesn’t impose a total restraint on marriage in general or promote divorce. On the other hand, a provision providing a financial benefit for an illegal act will always be found invalid.

Back to Minkoff’s strategy: it’s got at least one flaw. If funds or assets pass directly to her husband at some point in time and he hasn’t moved on to a “floozy” with someone five years after her death, he can do whatever he wants with those assets. A better solution would be to put the assets in an Irrevocable Trust containing the limitations and restrictions she wants.

Her plan also creates a tax issue. A gift in trust for the surviving spouse passing to the children if the spouse remarries means the trust won’t qualify for the estate tax marital deduction. There is a way around this, however. The trust can be structured so that the surviving spouse receives the net income of the trust during their lifetime.

The plan isn’t a bad one. However, an irrevocable trust might be a better way to achieve the desired end in cases like this.

There is another aspect to consider when planning to control assets after death. Children are happier when their parents are happy. If a second marriage would make a surviving spouse happier, having to live under the constraints of a “floozy clause” could create resentments and tensions within the family.

Talk with your estate planning attorney about creating an estate plan to achieve your goals while you are living and after you have passed. If controlling assets after you have passed is important to you, they’ll be able to come up with a plan. You don’t have to create a new name for it—unless your mother is as clever as Minkoff’s.

Reference: mondaq (April 10, 2025) “Fashion Designer Rebecca Minkoff Reveals She Has ‘Floozy Clause’ In Will”

Do You Need an Annual Financial Checkup to Complement Your Annual Physical?

“Every year, we plan a wellness physical with our doctors because we understand that health is wealth that money can't buy. However, do we take the same care and discipline with our financial health?”

You know an annual physical is important for staying healthy. However, do you also get an annual financial and estate planning checkup? A recent article from Forbes, “Time For Your Annual Wellness Checkup…Your Financial Wellness,” offers a step-by-step guide.

What You Can and Can’t Control. Planning for the future is more realistic with a clear understanding of controllable and uncontrollable factors. Add to this a healthy dose of imagination for unexpected events.

Here’s what you can control: investment decisions, asset allocations, liquidity and estate planning strategies. However, try as you might, there’s nothing you can do about market volatility, inflation rates, economic downturns and regulatory changes.

What Can You Do about the Uncontrollable Factors? Most importantly, steer clear of emotional reactions to market volatility. Conduct periodic reviews and be open to changing strategies. However, be sure changes are based on data and not emotions. You can be better protected against market fluctuations by maintaining enough liquid assets. Let the professionals on your team—financial advisors, CPAs, estate planning attorneys—use their knowledge to help you.

Review Investment Strategy and Longevity Plan. Take the long view with your investments, both for your own lifetime and the next generation, if passing wealth to the next generation is part of your estate plan. Are contributions consistent, and are accounts performing as anticipated?

Make sure that beneficiary designations are current. Unintended asset distribution occurs all too often, leading to family disputes and the wrong people receiving the fruits of your labor.

Review Estate Planning and Legacy Strategies. Probate is notoriously slow, expensive and frustrating to those who are left waiting for courts to act. With a well-drafted estate plan, you have an opportunity to avoid most or all your assets going through probate and having assets pass directly to beneficiaries. Assets going right to beneficiaries typically include life insurance policies, retirement accounts and payable on death (POD) or transfer on death (TOD) accounts.

Review all estate planning and trust documents and consider the people named as primary and successor trustees. Are they still the people who you want to be in charge of the trusts? You may want to name new people in these important roles if they have died or moved away.

An annual financial and estate planning checkup is good for your finances, your heirs and your peace of mind. If your estate plan hasn’t been updated in the last three to five years, make an appointment with your estate planning attorney to make sure it still works to achieve your long-term and short-term goals.

Reference: Forbes (April 10, 2025) “Time For Your Annual Wellness Checkup…Your Financial Wellness”

Just the Facts on Estate Planning

“There are many misunderstandings regarding estate planning that cause confusion.”

While you do need an estate planning attorney to prepare an estate plan properly, you don’t need to go to law school to understand basic facts about estate planning. As reported in a recent article from the Pauls Valley Democrat, “Some real facts about estate planning,” getting the right information on estate planning basics can alleviate unnecessary anxiety and help resolve concerns.

You can use a trust to avoid taxes. Well, not always. Creating a trust alone doesn’t save taxes. It depends upon the type of taxes being discussed—income taxes, federal estate taxes, state estate taxes, or inheritance taxes—and the type of trust being created.

The person who establishes the trust, known as the grantor, pays income tax on a revocable living trust. If the trust is an irrevocable trust, income held in the trust will be taxed at rates near the highest individual tax rate.

Trusts do offer possible estate tax savings, depending upon the type of trust and how it’s structured. However, estate taxes aren’t even a concern for most people, since an individual must own more than $13.9 million of assets at the time of their death before any federal estate tax applies. Whether or not this historically high exemption level remains after December 31, 2025, is still unknown and you should speak with your estate planning attorney to be sure you are prepared if your estate is near the $7 million level just to be sure.

The heir pays estate taxes. Not always. Beneficiaries don’t pay the estate tax. The estate pays federal and state estate taxes. Federal estate taxes apply only to the estates of people with large amounts of wealth, who have likely done the proper estate planning to avoid paying estate taxes in the first place.

If you live in one of the few states with an inheritance tax, then you’ll pay inheritance tax based on the laws of your state.

If inherited assets include a large amount of appreciation, there won’t be any capital gains taxes paid because the recipient receives the assets at their fair market value at the date of death. For example, let’s say your mother dies owning $100,000 of land, which she bought in 1958 for $10,000. If she sold the land, she’d pay capital gains tax on $90,000. However, her heir’s basis is $100,000, and they could sell the land for $100,000 and pay no taxes.

The best way to avoid worrying about estate planning is to schedule a consultation with an experienced estate planning attorney and discuss your unique situation. They’ll be able to create a plan to minimize your taxes, discuss whether a trust would be appropriate for you and your heirs, and give you the peace of mind that comes with knowing you’ve taken care of yourself and the next generation.

Reference: Pauls Valley Democrat (April 11, 2025) “Some real facts about estate planning”

Will Inflation Have an Impact on Your Estate Plan?

“A key goal for many people is to leave enough for loved ones to handle future expenses. If prices rise sharply, the same amount of money will buy less of what your heirs need.”

Inflation can add some twists and turns to your estate plan by increasing asset values and living costs. There are strategic moves to make if inflation is a concern, says a recent article, “4 Ways Inflation Can Change Your Estate Planning” from MSN. If you don’t already have an estate plan, now is the time to create one to protect your legacy.

If one of your estate plan goals is to make generous bequests to help loved ones, the amount you had once intended for them might not be enough. Start by checking how much inflation has eroded your bequest and if you can, adjust the amount based on current costs.

Another way to overcome inflation in bequests is to add assets to the estate that grow over time. These may include index funds or real estate property. Talk with your estate planning attorney about what kinds of assets you currently own and which could work best for inheritances.

While inflation pushing up real estate is good news for property owners, it can raise your estate’s total value. If the threshold for federal estate tax exemption changes, which is yet a big unknown, your heirs may end up with a tax burden instead of a windfall.

This can be addressed by moving assets to loved ones while you’re still living, which could keep your estate under certain tax thresholds. Irrevocable trusts, including a Spousal Lifetime Access Trust or a Grantor Trust, can also be used to move appreciating assets out of your estate. This works to lower potential estate taxes. An experienced estate planning attorney can help determine how your estate is best structured to minimize taxes on a federal and state level.

Increasing healthcare costs are taking a big chunk out of everyone’s pockets, as is the cost of long-term care. If your plan is to pay for a loved one’s medical costs or pay for your own long-term care, you want to protect your funds.

Long-term care insurance policies are costly. However, coverage could prevent your heirs from having to pay for those costs for you. Most insurance companies offer LTC plans as part of a hybrid life insurance plan, making coverage possible. If you expect to apply to Medicaid at some point for yourself or a loved one, this is something to plan for well before you need it. Medicaid has a five-year look-back period, and any wealth transfers made within that time will make you ineligible for coverage.

 You should also be sure your estate plan is up to date. If you don’t already have healthcare powers of attorney and living wills set up in advance, meet with an experienced estate planning attorney.

Reference: MSN (April 12, 2025) “4 Ways Inflation Can Change Your Estate Planning”

Here’s Why Everyone Should Have a Will

“If you die without a will, the state decides what happens to everything you leave behind: your money, your home and even your personal belongings.”

There isn’t an estate planning attorney alive who doesn’t have horror stories of what happens to families when a loved one doesn’t have a will. The person without a will leaves behind a mess for loved ones to take care of, including the risk of minor children being placed in foster care. This should be enough to motivate you to call an estate planning attorney, says a recent article from Investopedia, “What’s the Worst Thing That Can Happen If You Die Without a Will?”

Having an estate plan in place does not have to be complicated. However, not having one is. Family conflict is more likely to occur, probate can drag on for months or years and take a big bite out of your estate’s value. If you don’t have an estate plan with medical directives, you might be kept alive by artificial means, even if you’ve told everyone in the family you don’t want this to happen.

Every state has its own laws about how assets are distributed when there is no will. For the most part, they follow bloodlines. Estranged relatives could end up owning everything, or one child could end up with an unwanted responsibility. Having a will lets you be intentional about distributing your assets.

Even close families fight over inheritance when there’s no will. Without documenting your intentions in a will, family members can end up in court, sometimes fracturing families permanently. This is probably not the legacy you’d want to leave behind.

Probate is a legal process where the court validates a will, appoints an executor and allows the executor to administer the estate. If there is no will, the court will appoint an administrator, who is likely to be a stranger. They’ll track down assets, pay debts and distribute what’s left after their fees are paid.

While the court-appointed administrator is handling the estate, heirs will need to wait for any inheritance and the fees, and the months may stretch on far longer than if there were a will and an executor named.

Estate planning is also a means to preserve wealth and pass it on to the next generation. For families who are just getting started, receiving an inheritance of any size could make the difference between owning a home or continuing to rent without the opportunity to build equity for their own descendants.

If you think of creating an estate plan and a will as a gift to your children and your grandchildren, it may be more comfortable than thinking of it as a reminder of your mortality. An estate planning attorney in your community will have the legal knowledge and understanding of how families work. You can leave a legacy of caring, planning for the future and take care of those you love with an estate plan.

Reference: Investopedia (April 11, 2025) “What’s the Worst Thing That Can Happen If You Die Without a Will?”

Should You Put Your Home in a Trust?

“Putting your home in a trust can protect your assets while you’re alive and make the ownership transfer easier after your death.”

If you own a home, you know your name on the title proves ownership. If you decide you’d like to transfer ownership, the name on the title changes. According to an article from ABC 45 News, “How, and why, to set up a trust for your house,” you can transfer ownership of your home to a real estate trust.

One of many reasons to put your home into a trust is to make it easier for your executor and heirs if your estate plan includes passing the home to your children. Transferring your home to a real estate trust involves certain legal and tax benefits. Here’s a look at why this might be something to discuss with your estate planning attorney.

First, what is a real estate trust? A real estate trust is a trust designed to own real estate property, which is transferred into the trust by retitling the deed. Once this is done, like any other trust, the asset—the real estate property—is managed by the trustee for the benefit of the grantor and beneficiaries.

In some jurisdictions, you may need to have a new deed created—your estate planning attorney will know how it works in your region. The deed is then recorded with the local county recording office.

In most cases, the home's original owner names themselves as the trustee to maintain control of the property, although someone else can be named as a trustee. An adult child is often named as the trustee if the original owner is ready to take this step.

Trusts have many applications for estate planning as well as tax planning and asset protection. Depending on the type of trust your estate planning attorney determines is best, a trust can be established to protect the home from creditors as well as passing directly to heirs without needing to go through probate court.

If you need a revocable or living trust, the grantor (the person who creates the trust) can make changes or even close the trust at any time. This is appealing to some people because they want to be able to be in charge. When the grantor dies, the property is distributed to beneficiaries according to the directions in the trust.

If you put your home in an irrevocable trust, the asset is protected against lawsuits and creditors. The same protection doesn’t extend to a revocable trust, however. The irrevocable trust may be eligible for a stepped-up basis on the grantor's death, reducing estate taxes and capital gains taxes when the property is sold, if all required conditions are met.

Trusts are a popular means of circumventing the need to go through probate court, which can cost thousands and take months or years to complete.

Senior homeowners should consult with an estate planning attorney to learn how placing their home in a trust will impact their overall estate plan and Medicaid eligibility. If there is no estate plan currently in place, this is something to address as soon as possible. We don’t know what the future holds, but we do know that having an estate plan provides peace of mind for all concerned.

Reference: ABC 45 News (March 14, 2025) “How, and why, to set up a trust for your house”