Celebrities, Tax Problems, and Life Insurance
Celebrity status magnifies the problems we all can have. The tragic deaths of Phillip Seymour Hoffman, James Gandolfini, and Amy Winehouse illustrate the right ways – and the wrongs ways – in which people manage their estate. Tax specialist Robert W. Wood points them out for us in his current Forbes article. Here are three of his insights, along with my understanding of how life insurance can be a big help.
1. Keep it private.
Mr. Wood talks about the public and expensive nature of probate. Life insurance can avoid probate and thus keep this benefit private.
2. Make efficient tax transfers.
James Gandolfini directed his money the way he wanted, and also avoided taxation – with proper life insurance planning. Here is how Mr. Wood describes the plan:
Mr. Gandolfini took some tax-efficient steps. His teenage son received $7M in life insurance proceeds via an irrevocable life insurance trust, a tax efficient transfer. No estate tax there.
3. Beware of foreign law.
People with a green card can be eligible for life insurance. However, Mr. Wood cautions that property overseas may raise some tax questions. Competent counsel is advised.
Have you addressed all the potential problems with your estate? Are you making the best possible use of your life insurance?