UltraTrust.com reviewed the tragedy of Phillip Seymour Hoffman and his estate planning blunders. He was 46 years old when a friend found him unresponsive in a rented New York apartment after trying to reach him numerous times. According to the New York Times, Hoffman was found with a syringe sticking out of his arm and surrounded by small bags of heroin (1). He was one of the finest American actors of the 20th and 21st centuries, and he was known to families and friends as a very nice guy who somehow managed to come across as a menacing villain in films such Capote, “Mission: Impossible III,” and “Before the Devil Knows You’re Dead.”
Hoffman was a prolific actor whose net worth was estimated by the Christian Post to be in the range of $35 million (2). He is survived by three young children and his long-time partner Mimi O’Donnell. According to his will that will eventually have to be probated, Hoffman’s assets will be placed in an irrevocable trust for the benefit of his son, Cooper Hoffman, upon his 25th and 30th birthdays. He has placed his life-long partner, Marianne O’Donnell, in the role as trustee of the trust and a backup trustee of Emily Ziff. In the will, he goes on to name Marianne O’Donnell as the guardian of the children and a backup guardian of Suzanne O’Donnell, Marianne’s sister.
Since wills are public documents, we get this glimpse into the private life of a celebrity when probate petitions are filed. Wills do not provide the privacy and confidentiality of trusts.
“Since wills are public documents, we get this glimpse into the private life of a celebrity when probate petitions are filed,” explains Rocco Beatrice, Managing Director of Estate Street Partners, LLC, parent company of UltraTrust.com. “Wills do not provide the privacy and confidentiality of trusts. More importantly, and the biggest blunder in his planning, Hoffman will be forced to pay $10-12M in Estate Taxes because all of the assets were titled in his name. An Irrevocable trust would have saved the family a lot of money and time avoiding probate and the estate tax.”
According to the Christian Post, although Hoffman has shuffled off this mortal coil, moviegoers have most recently seen him in the long-awaited sequel “Hunger Games” sequel, “The Hunger Games: Mocking Jay Part 2,” and possibly other films (2) such as “God’s Pocket” and “A Most Wanted Man.”
“Though he is no longer with us, Hoffman will certainly continue to earn income through the body of cinematic work he left behind,” explains Mr. Beatrice. “Trusts are not only smart substitutes for wills; they are legal structures that effectively pass more than just wealth and estate to beneficiaries. Trusts make the execution of artist contracts more efficient. In this regard, should Hoffman continue to earn compensation or royalties through the Hunger Games franchise or other films, payments can be easily deposited into a trust – avoiding future gift and estate tax issues if the family is guided in the right direction.”
Hoffman’s death has also called attention to his sad history of drug use. According to the Philadelphia Inquirer, one of the heroin dealers who allegedly catered to Hoffman has been arrested and is being held on a $200,000 bond in a New York detention facility (3). The New York Times has mentioned that Hoffman had previously spoken about issues surrounding his drug addiction, and that he had been able to get his demons under control more than 20 years ago (1).
“The possibility of a tragic relapse certainly makes Hoffman’s death even gloomier,” explains Mr. Beatrice. “Alas, death waits for no one; this is something that we should all keep in mind. When people are dealing with substance abuse, they should do everything in their power to get help. Whenever they get a moment of clarity, they should embrace it and think about important issues such as their mortality and what the difficulties that their loved ones may encounter in the absence of estate planning.”
“Estate planning professionals often get questions from clients concerned about leaving their assets to beneficiaries who suffer from substance abuse issues. To this effect, trusts can be constructed in a way that trustees will only distribute funds destined to pay for their beneficiaries’ recovery and rehabilitation (5).” What happens, however, when the grantor is the one afflicted by the throes of drug abuse?
“It’s a difficult question to answer. It bears mentioning that moment of clarity again, and it is helpful for addicted grantors to recognize those moments so that they can get their affairs in order,” answers Mr. Beatrice. It also helps when loved ones are supportive and realize the need for estate planning. Hoffman’s estate is certainly sizable and puts him in a high tax bracket; we certainly wished that he had a chance to set up an effective instrument such as an irrevocable trust so that his survivors did not have to bear the brunt of considerable estate taxation.”
“At least with a will Hoffman avoided intestacy. Everyone should try to avoid intestacy,” says Mr. Beatrice, “either by trust or, at the minimum, with a will, such as Hoffman executed. Intestacy can bring about major taxation issues and unwanted lawsuits by creditors and unknown parties.”
About Estate Street Partners (UltraTrust.com):
For 30 years, Estate Street Partners has been helping clients protect assets from divorce and frivolous lawsuits while eliminating estate taxes and probate as well as ensuring superior Medicaid asset protection for both parents and children with their Premium UltraTrust® Irrevocable Trust. Call (888) 938-5872 to learn more.
Estate Planning, Asset Protection, and Income Tax Advice
from your Accountant is generally a Bad Idea States a
Recent NCLC Study
A January 30, 2014 CNBC report by Herb Weisbaum (1) reviewed a comprehensive study and subsequent report by the National Consumer Law Center (NCLC) that uncovered widespread irregularities in the handling of financial guidance and tax returns by tax preparation professionals nationwide (2).
According to NCLC, a substantial portion of the NCLC report consists of mystery shopping evaluations of tax preparation professionals ranging from certified public accountants (CPAs) to enrolled agents and from major tax return shops such as H&R Block to lesser-known offices such as the colorfully named Mo’ Money Taxes.
In general, accountants who only handle 1040s will not be a good choice for Medicaid planning, asset protection, wealth preservation, or estate planning advice.
Some of the findings in the report (2) are alarming according to the NCLC. The NCLC found an uncomfortably high rate of incompetence and even fraud. Tax preparation shops are used far more frequently than CPAs and Enrolled Agents; these two are registered with the Internal Revenue Service (IRS) and thus fall under government oversight, but only four states have a regulatory body overseeing tax preparers: California, Maryland, New York, and Oregon. With this report, the NCLC said that they hope to call attention to their support of legislation to regulate tax preparation services.
According to the NCLC, the report uncovered data entry errors as well as major mistakes such as incorrect filing status and bungled Earned Income Tax Credit (EIC) calculations. UltraTrust.com sees another problem insofar as individuals relying on CPAs for financial planning: How can they trust CPAs with their estate planning and asset protection needs when they can’t even get their 1040 filings right?
“Tax returns are the bread and butter of many CPA offices,” explains Rocco Beatrice, managing director of Estate Street Partners, parent company of UltraTrust.com, “and they limit their scope of taxation practice to processing returns during the busy season. It’s a good business for them, but sometimes they offer other services outside of the season for the purpose of maintaining a steady flow of income. In addition, many people depend on their accountant as a knowledgeable sound board for their entire financial planning, estate planning, and asset protection. In many instances, we find clients asking for their accountants to give second opinions on the advice we give, and very few are experts in all of these fields of expertise, but that does not stop clients from asking. It is scarey when the accountant does not know what he does not know.”
Through UltraTrust.com, Estate Street Partners, LLC offers a range of wealth preservation, asset protection and estate planning services. Mr. Beatrice holds the requisite certifications to offer and perform these services, but also leverages the attorney’s on staff to do the legal work, and the firm has 31 years of experience in this regard. “CPAs can follow a professional path that will allow them to offer estate planning and asset protection services, but not all of my colleagues choose this career option.”
“In general, accountants who only handle 1040s will not be a good choice for Medicaid planning advice, asset protection, wealth preservation, or estate planning,” explains Mr. Beatrice. “It is important to review the firm’s certifications, qualifications and experience. Just about any CPA will be able to set up a basic irrevocable living trust because they are completely revocable, but proper construction of more sophisticated tools such as an irrevocable trust agreement requires knowledge, expertise and accountability.”
“CPA firms that handle estate planning and asset protection services typically also offer taxation advice. In fact, it is a good idea to allow them to handle tax preparation as well. Tax planning is also part of estate planning and wealth management.” finishes Mr. Beatrice.
The American Institute of CPAs (AICPA) recently issued a statement (3) on the standards that their professionals must follow when dealing with clients who request personal financial planning services with regard to their retirement and estate issues. AICPA reports that the number of members who provide these services has increased by 32 percent since 2009.
Although there is strong demand for CPAs who also offer personal financial planning according to the AICPA report, not all accounting professionals are pursuing these certifications. For this reason, Mr. Beatrice recommends that potential clients should ask their CPAs if they hold the proper certifications before asking for advice in areas that may be outside of their expertise.
About Estate Street Partners (UltraTrust.com):
For 30 years, Estate Street Partners has been helping clients protect assets from divorce and frivolous lawsuits while eliminating estate taxes and probate as well as ensuring superior Medicaid asset protection for both parents and children with their Premium UltraTrust® Irrevocable Trust. Call (888) 938-5872 to learn more.
CNN reports that in terms of legal headaches and adverse media exposure, Justin Bieber is unlikely to forget the year 2013. He may also want to add 2014 to the list of musical career years that he would just as soon wish to put behind him (1), but his popularity and earning potential do not foreshadow the possibility of shunning the limelight anytime soon.
CNN went on to say that although news media portrayals of Bieber’s alleged antics and purported out-of-control behavior tend to paint a sordid state of affairs, his legal standing and financial affairs seem to be in better shape than his relationship and personal issues. (1) Like any entertainment star of his caliber, Bieber’s net worth makes him a sizable target for lawsuits and potential liability matters. This is something that CBS News discussed nearly a year ago (9).
It is easy to speculate from all these reports that Bieber is on the verge of completely losing control, but the facts and legal outcomes thus far paint a different picture.
“In late February 2013, Bieber’s legal troubles only involved lawsuits filed by a former bodyguard as well as from a woman from Oregon who claimed that the Canadian pop star damaged her hearing.” says Rocco Beatrice, Managing Director of Estate Street Partners, LLC. Back then, just about all of Bieber’s legal concerns were mostly concentrated to the United States; in 2013, however, according to CNN, reports of his alleged reckless behavior while on tour emerged from Brazil, Canada, and Southern California (1).
Forbes examined some of Bieber’s vast holdings in the United States, which include real estate in Arizona and Pennsylvania as well as venture capital investments in social media and Internet technology start-ups (2). Mr. Beatrice commented that Bieber’s assets in the United States should certainly merit being held in a properly constructed and executed irrevocable trust: “This is an essential asset protection strategy that would protect Bieber’s wealth as he continues to perform in the United States and around the world.”
In mid-January, Bieber was arrested in South Florida on charges of driving under the influence, illegal street racing and resisting arrest. Reports by the Associated Press indicated that Miami Beach police officers approached a rented Lamborghini sports car driven by Bieber, who allegedly smelled of alcohol at the time and may have been driving at twice the posted speed limit (3).
The Associated Press further reported that Bieber supposedly told law enforcement officers that he had been smoking marijuana and taking prescription drugs at the time he was arrested, and that his mother handled his medication regime (3). As it stands, Bieber is due to appear on Valentine’s Day at the Miami-Dade County Richard E. Gerstein’s Justice Building to answer to one misdemeanor charge of resisting an officer without violence, under docket number B14002900 (4).
According to ABC News, after Bieber’s arrest and bail release in Miami, he left for Toronto. Once in Canada, he surrendered to law enforcement was charged with assault in relation to an alleged incident involving a limousine driver on New Year’s Eve. These criminal allegations are exacerbated by earlier reports that Bieber may have thrown eggs at his neighbor’s home in Southern California (7).
With regard to the legal issues above, Mr. Beatrice commented: “It is easy to speculate from all these reports that Bieber is on the verge of completely losing control, but the facts and legal outcomes thus far paint a different picture.” Mr. Beatrice is referring to Moshe Benabou v. Justin Bieber et al., docket number BC498862, in the Superior Court for the State of California, County of Los Angeles, which CNN reports was recently settled (5). On that case, a professional bodyguard alleged that Bieber assaulted him with a barrage of punches to his upper body. The bodyguard also mentioned that he made no attempt to protect himself from Bieber’s physical attack due to concerns for the singer’s well-being.
“This case could have gone to trial, but it was resolved outside of the courtroom,” explained Mr. Beatrice. “Bieber could face more of these civil lawsuits and complaints that seemingly target the considerable wealth he has gained over the last few years. The alleged criminal charges only elevate his profile in the eyes of potential plaintiffs looking to file civil complaints against him.”
Another issue examined by UltraTrust.com and Mr. Beatrice is the report of, according to the Miami Herald, Bieber spending $75,000 in a single outing at a Miami nightclub. (8) “Bieber is an adult who can spend his earnings as best as he sees fit. It is interesting to see alleged reports of profligate spending now; it is almost as if he has grown out of a California Coogan Blocked Trust Account.”
What Mr. Beatrice is referring to is the law that protects minors working in the entertainment and showbiz fields in California, Louisiana, New Mexico, and New York (6). In California, this law requires that 15 percent of earnings by minors working in showbiz be placed in a blocked trust account to prevent careless handling of funds by parents or guardians. Once the minor becomes an adult, the account becomes unblocked. “Perhaps Bieber is now in control of funds previously blocked in a Coogan trust account, that may explain the increased spending. Irrespective of this, any assets that may in his control could be made safer in an irrevocable trust.”
About Estate Street Partners (UltraTrust.com):
For 30 years, Estate Street Partners has been helping clients protect assets from divorce and frivolous lawsuits while eliminating estate taxes and probate as well as ensuring superior Medicaid asset protection for both parents and children with their Premium UltraTrust® Irrevocable Trust. Call (888) 938-5872 to learn more.
Since wills are public documents, we get this glimpse into the private life of a celebrity when probate petitions are filed. Wills do not provide the privacy and confidentiality of trusts. 
