From the late Philip Seymour Hoffman to Sting and from Bill Gates to Warren Buffett: Some of the ultra-rich do not want their children to become trust fund brats. UltraTrust.com investigates.
Boston, MA (PRWEB) September 03, 2014
“Hoffman left behind a will after his unfortunate death that sparked a massive debate by many ultra-wealthy, including Sting, Gates, and Buffett regarding their passion for avoiding creating trust-fund kids,” says Rocco Beatrice. Hoffman passed away from a massive heroin overdose in early February; he left a will that specifically called for his son to be raised in an American metropolis, and he also voiced his disapproval of the trust-fund baby image. Hoffman limited his estate planning to a will that was introduced in surrogate court weeks after his death (4). Hoffman is hardly alone in this overly cautious approach to the trust fund baby stigma.
In early 2012, American voters were given a close look at the lives of the rich and famous via a man who could have become President of the United States. The wealth of former Massachusetts Governor Mitt Romney became a point of interest among the public, particularly when it came to estate planning. What voters in the U.S. learned was that Romney’s five sons: Ben, Craig, Josh, Matt, and Tagg, had been certainly taken care of by their parents to the tune of $100 million (1).
Clients are only limited by their own creativity when drafting incentives for an irrevocable trust.
As a successful investment banker, Romney certainly knew how to take advantage of certain financial vehicles that offered tax-free gifts that he could use to establish a trust fund for his children. As with many other things in politics, Romney’s thoughtful estate planning drew praise from some circles and criticism from others (1). On one hand, some families approved of Mitt and Ann Romney’s desire to financially establish their sons at a time when the economic future of the world faces uncertainty; on the other hand, famous millionaires such as singer Sting, American investor Warren Buffett and Microsoft co-founder Bill Gates have expressed their opinions on the “trust-fund kid” phenomenon (2)./div>
Gordon Matthew Thomas Sumner, more famously known as Sting, has explained that his $300 million net worth will not become a burden to his children, who are already accustomed to working and rarely ask their father for anything (3). The former member of the legendary British rock band The Police is not alone in this sentiment. In a way, Bill and Melinda Gates have already planned for their three children to get $10 million of the couple’s $76 billion (2). The Gates’ rationale in this regard is succinctly explained by billionaire investors Warren Buffett, who wants to leave his children enough money so that they can feel the joy of financial freedom, but not so much money so that they feel like they don’t have work.
Hoffman and Sting publicly hated the concept of Trust fund babies
“The trust-fund baby image tends to be very negative among our clients,” explains Rocco Beatrice, Managing Director of Estate Street Partners, LLC. “We are a financial and estate planning firm, and we get some clients who feel that leaving everything they own to their children would just end up spoiling them and making them lazy. It’s a valid concern, not to mention that a lump sum distribution of assets could be quickly spent.” Estate Street Partners, LLC, operates UltraTrust.com, a website where clients can learn about the advantages of irrevocable trusts as estate planning tools.
Commenting on Hoffman’s probate proceedings, Mr. Beatrice comments: “Here we have an actor whose estate is estimated at $35 million and bound to increase as more films that he worked on are released post-mortem. One can understand his hesitation at leaving his three children all of his assets at once, but his will bequeathed everything to Mimi O’Donnell, his longtime partner. Our office would have recommended an irrevocable trust instead of a will. If Hoffman wanted O’Donnell to administer his estate so that his children do not grow up to be trust-fund babies, then he could have appointed an independent trustee to carry out distributions to his children with a certain amount of discretion and leveraged the use of incentives. This is known as spendthrift and incentive clauses.”
By leaving all his assets to O’Donnell by means of a will, Hoffman practically handed more than $10 million to the IRS (4). Mr. Beatrice explains: “Hoffman never married O’Donnell, so only a $5.4M estate tax deduction applies in this case. O’Donnell now carries the burden of estate taxation, 35 percent of Hoffman’s net worth above the $5.4 million. His children are not going to see that money because a will under these circumstances offers no tax advantages. His family could have gotten considerably more had Hoffman set up an irrevocable trust.”
In 2003, a documentary produced by one of the heirs to the massive Johnson & Johnson estate shook the high society circles of New York’s Park Avenue and The Hamptons (5). “Born Rich,” a film by Jamie Johnson, interviewed various members of the “trust-fund elite,” individuals with last names such as Trump and Bloomberg. The focus of the film was on the squandering nature of the interview subjects, who did not amount to much outside of profligate spending and snobbery.
“The Born Rich documentary was an eye-opener, but things do not have to be this way,” explains Mr. Beatrice. “There’s a sensible way to bequeath your estate to your children, and that is through an irrevocable trust managed by professional and independent trustee. We mentioned the spendthrift and incentive clauses, which can be established in various ways. The beneficiaries of the trust, for example, can get certain distribution amounts upon completion of certain requirements or milestones. Graduating from college is a popular trigger for a spendthrift clause; getting a job can be another one, or matching of W-2 income. The fact is that clients are only limited by their own creativity when drafting incentives for an irrevocable trust.”
Mr. Beatrice concludes: “With all respect to Sting, Buffett and others who may be shocked by documentaries such as Born Rich, the fear of leaving too much money to your children is unfounded. A solid estate planning strategy can encourage surviving children to prove to the trustees that they have done their part to earn a distribution from the trust, which can be structured in the way that you want so that your children do not end up like the trust-fund babies you disapprove of.”
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.
Jo Wood:Mick Jagger ‘devastated’ by L’Wren’s suicide
Mick Jagger’s long-time girlfriend found dead
Mick Jagger Devastate by L’Wren Scott’s Suicide
It was a tragic end to a love affair that was often tumultuous according to the Telegraph. American designer and former model L’Wren Scott took her own life on March 17th; a little more than a year after she composed her last will and testament (7). The document, which was filed in Manhattan’s Surrogate Court, revealed that Scott left her entire estate to her long-time romantic partner and legendary lead singer of the Rolling Stones (1).
L’Wren Scott was 49 years old when an administrative assistant found her in a New York City apartment located at 200 11th Avenue on March 17th, 2014 (2). Her death was ruled a suicide shortly after police officers and the medical examiner issued their respective reports. Mick Jagger was on tour with the Rolling Stones in Australia when he received the sad news. Scott and Jagger were never married and did not have children.
According to a news report by CNN, Scott’s will was quickly entered into probate at Manhattan’s surrogate court (3). Estimates of her personal net worth vary; CNN used public records to determine that her estate could be worth about $9 million in assets, which include the stylish apartment and fashion design business holdings.
The BBC reported that Scott’s design firm in London, LS Fashion Limited, was operating at deep loss when compared to her assets (2). The Telegraph cited records kept by Companies House in Britain that indicate an operational business loss of $5.9 million two years ago.
“We are getting this picture of Scott’s estate due to the very public nature of wills, which routinely enter the public record via probate court. We are also getting other details about her life and relationship with Jagger because wills tend to feed tabloid journalists who are pretty good at sleuthing,” explained Rocco Beatrice, Managing Director of Estate Street Partners, LLC and of UltraTrust.com. “Irrevocable trusts are pretty good instruments for privacy when it comes to estates and personal affairs.”
We are getting this picture of Scott’s estate due to the very public nature of wills. Probate, public scrutiny, and estate taxes could have been avoided with an irrevocable trust.
What Mr. Beatrice is referring to with regard to revealing personal information and inviting media speculation has already happened in the wake of Scott’s sad demise. The Telegraph reported that Scott’s will did not include any liabilities (1); this may have, according to the Telegraph, “prompted speculation about her suicide” being prompted by turmoil caused by financial adversity. CNN included a statement issued by LS Fashion Limited that admonished such speculation and calling it disrespectful./div>
Scott was born Laura Ann Bambrough and was known as Luann until she entered the world of high fashion (4). She was a towering and shapely beauty who graced the runways of Paris until she decided to put her creativity to work. She moved to Los Angeles and started working as a stylist and later as a creative director (5). Scott had a great eye for ultra-feminine design; she went from high fashion to wardrobe design for Hollywood films and later a lucrative contract with Banana Republic (4).
Prior to meeting Jagger in 2003, Scott had been briefly married. In her will, however, this fact about her life is subject to a bit of ambiguity. Her IMDB biography states that she was married for a few years in the 1990s (4), but on her will she wrote that she was never married and had no children (3), but she also crossed out the adverb “never.”
On the issue of crossed out words on wills, Mr. Beatrice explained: “Depending on the jurisdiction, crossed out words or phrases may render a will invalid; changes to wills should be formally filed as codicils. Handwritten and holographic wills can also become problematic. The nature of irrevocable trusts as estate planning tools makes them less likely to suffer these potential pitfalls because they call for professionals to get involved in the proper structuring of the documents and their formal amendments.”
Although Scott’s brother attended her funeral service, she seemed to have been estranged from her surviving sister. There has been plenty of speculation as to why Scott did not include her siblings on the will and instead her sizable estate to Jagger, whose net worth according to the Telegraph is estimated at $300 million (1).
“This is a sign of someone who was truly in love despite all other turmoil,” explains Mr. Beatrice. “Still, emotional conflict should not preclude estate planning, particularly when wealth is being created. Here we have a very successful and wealthy fashion designer who could have benefited from an irrevocable trust.”
“By leaving a will and bequeathing her entire estate to Jagger, she also turned him over to creditors and made him liable for New York estate taxes. These unpleasant situations of probate, public scrutiny, and estate taxes could have been avoided with an irrevocable trust.”
Mr. Beatrice is referring to New York’s estate taxes, which requires filing a special tax return within nine months after a grantor has passed away. This taxation applies to estates with values greater than $1 million (6). Irrevocable trusts can also be used for asset protection and wealth preservation during an individual’s lifetime since they offer legal protections against creditors to a certain extent.
In closing, Mr. Beatrice stated: “There is no question that Scott was deeply in love until the very moment she left us. This is a very human gesture, but death does not leave others off the hook when it comes to financial obligations and taxes. Even when we are emotionally consumed, we must think about the potential liabilities we may unexpectedly burden our loved ones with when our time comes. To this end, irrevocable trusts are much better instruments than wills.”
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.
Robert Kardashian’s Diary is at the Center of this Court Battle
UltraTrust.com, founded by Estate Street Partners, recently analyzed the case filed on April 4, 2013 which was settled in August, by the Kardashian family in U.S. District Court for the Central District of California (Case No. CV13-02406) against Ellen Pearson, the third wife of Robert Kardashian over the ownership of Robert Kardashian’s diary among other items and for infringing on “private personal and copyright protected” material of her late husband’s diary and family photos according to court documents (4).
According to LexisNexis’s Law360 and International Business Times, the whole issue begins with Robert Kardashian’s last will and testament (3) that the Kardashian family asserts that Robert Kardashian (2) bequeathed all of his tangible and intangible possessions to a trust benefiting his children and with, according to court documents, the exception of one house and it’s furnishings (5).
Wills may be a great way to appoint guardians of children, but often wills fall very short when it comes to asset protection and distribution
Robert Kardashian’s estate planning documents (4, 5) define “tangible” property as including “clothing, jewelry, and other personal effects,” “books,” “works on paper,” as well as “other items of…personal use”. The Will goes on to define “intangible” property as including “rights in literary…properties, rights in works of art…copyrights, publishing rights, and rights to a deceased personality’s name, voice, signature, photograph, or likeness.”
“So it seems pretty clear the diary is in the Kardashian children’s trust’s possession, right?” asks Rocco Beatrice, Managing Director of Estate Street Partners.
UltraTrust.com scrutinizes the case a little further.
Ellen Pearson, who was married to Robert Kardashian for two months before he died in 2003 according to Hollywood Reporter (3). According to court documents, Pearson was the person in the exception who inherited the home and it’s furnishings (4, 5).
Bauer Publishing, owner of “In Touch” and “Life & Style”, wrote an article on their Feb 4th issue of their “In Touch” magazine called “The Secret Kardashian Diaries” and “Life & Style” magazine had an article on the Kardashians. Hollywood Reporter states that Bauer supposedly received licensed portions of Robert Kardashian’s diary and photos from Pearson (3).
“The home and furnishings exception is clear, so one might believe that Pearson own’s the diary. The question then may become, ‘Does it matter who owns the tangible diary?'” inquires Mr. Beatrice.
Rocco reflects, “The dairy itself is certainly not the house and it is certainly not intangible, but it may be considered furnishings. If it passes the furnishings test, then the tangible object, the actual diary itself, may be Pearson’s possession. But, what about the intangible copyrights of the contents?”
The Kardashians claim, according to the Will and its definition of “intangible” property, the copyright contents of the diary and the photos are “incontestably” under the ownership of the Kardashian family according to Hollywood Reporter (3).
“In this age of complicated estate planning, no one knows what is going to happen after death. Robert Kardashian, being one of the best lawyers in the country, couldn’t even predict this mess,” explains Mr. Beatrice. “The drafters of Robert Kardashian’s estate plan couldn’t predict it either.”
“So, it was possible that the court would have found that Pearson owns the diary itself, but the Kardashians may own the publishing right and copyright contents, but we will never know because the matter was privately settled. Ellen would then be able to hold the diary and read it, but not profit from it,” clarifies Mr. Beatrice.
The Kardashians went on to claim that since Pearson didn’t list the assets in her bankruptcy proceedings, that she didn’t own them or, if she did own them, then she has hidden them from her bankruptcy trustee, which according to the lawsuit “would constitute an admission that Defendant Pearson defrauded the Court and her creditors.”
According to the Will and Trust, anything falling under the categories “tangible” property and “intangible” property should go to the trust.
Although, according to court documents, Ellen filed a response (5), that the lawsuit was solely a publicity stunt.
“An irrevocable trust, funded before Mr. Kardashian’s death, could have held all of his assets and left instructions for the trustee stating who may have the benefit of what,” asserts Mr. Beatrice.
An irrevocable trust could have owned everything that Robert Kardashian left in the last will and testament and simply allowed the beneficiaries to use items. The trust could have been worded in a way to give the trustee final say and thus avoided court or, at least, significantly mitigated the chance of any legal contestations.
“Mr. Kardashian could have left trustee instructions for Pearson to have use of the house and furnishings, but no rights to sell them or rent it. In this way the trust would have preserved all the rights to all of the property.”
“Having Ellen inherit anything outright was probably a mistake,” posits Mr. Beatrice.
To learn how to protect assets save on estate taxes and probate costs visit UltraTrust.com, the irrevocable trust experts. Visit MyUltraTrust.com to set up a Do-it-yourself irrevocable trust plan.
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About Estate Street Partners (UltraTrust.com):
Assets can be protected from frivolous lawsuits while eliminating your estate taxes and probate, and also ensuring superior Medicaid asset protection for both parents and children with their Premium UltraTrust® Irrevocable Trust. Call today at (888) 938-5872.
UltraTrust.com, founded by Estate Street Partners as an informational website on expert irrevocable trust and estate planning, has recently reviewed James Gandolfini’s estate planning and will document (3) to determine if Mr. Gandolfini made the best choices for his family [Surrogate’s court of the State of New York, County of New York, File No. 13-2546, (2013)].
On June 19, 2013, Reuters reported that James Gandolfini died in Rome, Italy (1). He was the actor that played Tony Soprano on the hit series “The Soprano’s.” A hospital source said It was confirmed by autopsy it was a heart attack.
It appears that some estate planning lawyers as outlined in a report by Fox News (6) have deemed Mr. Gandolfini’s estate plan as less than ideal and some critics have argued that he could have done much more to save from paying so much in taxes according to elderlawanswers.com (5).
William Zabel, an estate planning lawyer who has represented the likes of billionaire George Soros and Howard Stern, has largely criticized and attacked James Gandolfini’s estate plan in the story by Fox News (6).
You need more than that [a will], especially if you have assets over as little as $500,000.
There have been reports that his estate is estimated at around $70 million, but Gandolfini’s estate lawyer informed The New York Times that this is not accurate. However, he did state Gandolfini’s estate was substantial also noted at CNBC (4).
Despite the criticism of Mr. Gandolfini’s estate planning, UltraTrust.com believes that the critics could be wrong and perhaps Mr. Gandolfini did make the right choices for his family.
“Look, a will is a great way to make sure your minor children have good people to raise them, but other than that, they don’t do nearly enough for 90% of people,” explains Rocco Beatrice, Managing Director of Estate Street Partners, LLC.
‘Sopranos’ Star, James Gandolfini’s, Estate Planning Controversy
“You need more than that [a will], especially if you have assets over as little as $500,000.”
James Gandolfini certainly had assets, although no one is quite sure what his net worth is according to CNBC (4). Celebritynetworth.com estimates it to be $70 million (2), although the New York probate petition and court documents (3) puts the property going through probate in NY at $1 million to $5 million. Why such a big difference? What happened to the other $65 million?
“When you have a trust, whether revocable or irrevocable, those assets do not go through probate, so they would not show up in a probate filing. Yet another explanation could be that these are the only assets he had in the state of NY,” explains Mr. Beatrice.
“In fact, with the right type of trust they wouldn’t show up as part of his estate anywhere.”
UltraTrust.com believes one of the main advantages of having a trust is the privacy issue.
UltraTrust.com further explains that no one needs to ever know how much your children have inherited, because either it has not gone through probate so there is no public record, or, the trust continues to hold the assets, so the children, in this case, do not really own the assets anyway.
The fact that there is a discrepancy between Mr. Gandolfini’s net worth and the amount going through probate tells us that there must be additional assets somewhere. UltraTrust.com found Mr. Gandolfini left a little evidence of his estate planning prowess; he reportedly left a $7 million dollar life insurance account in an irrevocable life insurance trust (ILIT) for his son verifies elderlawanswers.com (5).
“Putting a life insurance policy in a trust is a smart thing to do, depending on the situation. Mr. Gandolfini was able to pass $7 million on to his son tax free without even having to wait for the assets to grow,” explains Mr. Beatrice.
“In fact, he most likely used his gift tax exemption to pay the premiums and therefore contributed even more tax free.”
What does the combination of the asset discrepancy and the sophisticated life insurance instrument say about the will that some estate planners are criticizing as stated by Fox News (6)?
The will probably doesn’t matter.
“I believe Mr. Gandolfini knew that he would never spend $70 million, so he put most of it in trust for his beneficiaries,” hypothesizes Mr. Beatrice.
“Where did the rest of the assets go if not to trusts then?”
The planners at UltraTrust.com estimate that Mr. Gandolfini could have created multiple trusts for his multiple descendants. If they are solid irrevocable trusts, like the UltraTrust, then those assets would have also been protected during his life.
“It seems so common that a celebrity is being sued or some famous wealthy person has died in the news. There really is no better way to protect assets than with an irrevocable trust.”
UltraTrust.com credits the irrevocable trust as a safe owner for assets that is managed by the trustee who is contractually obligated to follow the rules set forth by the individual who funded the trust.
In this way, trust assets are no longer owned by the individual who put them in the trust. So if that individual gets sued or files for bankruptcy, those assets aren’t included as assets available to pay a creditor’s’ claim after a certain period of time – also know as a statute of limitations for gifts. This varies slightly state to state but is generally 4 years.
UltraTrust.com additionally deems a trust can last through many lifetimes and keep assets safe while allowing the beneficiaries access to the funds.
“In other words, the children can still benefit from the assets in the trust, but if they do something foolish, they won’t lose anything,” clarifies Mr. Beatrice.
UltraTrust.com regards Mr. Gandolfini as intelligent enough to hire someone who specializes in estate planning, so hopefully all of the estate planning options were explained to him thoroughly.
“An irrevocable trust can keep other people’s noses out of your business, protect your assets and continue to protect through the beneficiaries lives, long after you are gone,” asserts Mr. Beatrice.
“Exactly what a celebrity or any person of wealth needs.”
Those at UltraTrust.com are convinced the will, in Mr. Gandolfini’s case, is probably just the tip of the iceberg, and not a terribly important one.
To learn how to protect assets save on estate taxes and probate costs visit UltraTrust.com, the irrevocable trust experts. Visit MyUltraTrust.com to set up a do-it-yourself irrevocable trust plan.
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About Estate Street Partners (UltraTrust.com):
Assets can be protected from frivolous lawsuits while eliminating your estate taxes and probate, and also ensuring superior Medicaid asset protection for both parents and children with their Premium UltraTrust® Irrevocable Trust. Call today at (888) 938-5872.
Clients are only limited by their own creativity when drafting incentives for an irrevocable trust. 
