James Gandolfini’s estate mistake

The late actor, James Gandolfini died and left an estate worth an estimated $70 million. Now thanks to bad estate planning, the IRS may take up to 50% of that estate.

The larger-than-life actor gave $1.6 million dollars to various friends and relatives. He split the rest up among the following people: his two sisters-30%, his wife-20% and 20% to his daughter. His son was the benefactor of a life insurance policy which is not subject to taxes.

The New York Daily News quotes William Zabel, the estate lawyer for the stars, as saying,

“It’s a nightmare from a tax standpoint.”

Zabel said the “big mistake” was leaving 80% of his estate to his sisters and his 9-month-old daughter. That makes the money subject to death taxes at rate of 55%.

You can read Gandolfini’s will here.

So, even being a rich celebrity doesn’t mean you can’t get bad advice.  With that in mind, here are six tips that will help you pick the right probate/estate planning attorney.

  1. Look for an estate attorney with a customized web site, rather than one with a prepackaged generic site with lots of pretty pictures. Pick a custom site loaded with informative wills, trusts or probate articles about the area of law that pertains to your situation. Content-heavy sites are prepared by experienced wills and trust lawyers, not web masters. Avoid those slick sites with lots of flash. You want an old-school law firm with knowledge, not glitz.
  2. Look for an estate planning law firm that specializes in the area of law that you need. A general law firm that says they do everything cannot possibly do everything well. The content on the web site will give you an indication of what the firm does best.
  3. Contact the NY estate lawyer directly and try to speak to the probate attorney who will be handling your case. Don’t settle for being diverted to a paralegal or an assistant. If the estate planning lawyer is too busy to speak with you initially, ask for a call back. If he or she is too busy to give you the attention you need, maybe you should try someone else. When you speak with the estate lawyer, make sure he/she is a good listener. They can’t help you if they don’t listen. It is important that you feel comfortable with your estate planning lawyer. First impressions are critical.
  4. If the New York probate attorney has client reviews on their site, read them all. You will be able to differentiate between honest reviews and canned ones. Don’t be put off by a single bad review; it will only legitimize the others. After all, you can’t please everyone all the time.
  5. Ask the NY probate lawyer to explain the entire process to you. Do not be shy; you have the right to know. A good estate lawyer should be able to explain even the most complex matter in simple, easy to understand terms. Remember, you are the boss since you are paying the bill.
  6. Finally, go with your gut. Picking the right wills, trusts or estate lawyer can be a challenge. Once you find the right person, the rest of the process will be much easier.

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Costly estate planning mistakes

Many people think estate planning means drawing up a will an the rest will take care of itself.  That’s a common error people make. Here are a few others.

Procrastination

Surveys have found that not only do 50% of people with children not have a will, many don’t have any other estate planning documents drawn up. This applies not just to young people but older retired Americans in all income categories.

People quite often don’t want to deal with estate matters because it means they have to think about their death. They also make the mistake of thinking their assets will automatically go to their surviving spouse or kids. That all depends on the state law. Different states have different laws.

Not signing your will

So you have drawn up a will. Good for you.  But have you signed it? That might sound like a stupid question but It is not uncommon for people to draw up a detailed will, take it to their attorney and forget to sign it. Without your signature, it’s just a piece of paper.

Updating beneficiaries.

You may think your assets will go to your spouse after you die, but another big mistake is not updating who you beneficiaries will be. If you remarried you might have forgot to update your will. The court system is littered with people battling it out over inheritances because the deceased forgot to update their will  and their money went to their ex,

These are just three common mistake in estate planning. Consult a good estate attorney for more detailed information on what you need.

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Winner emerges in Interview Magazine bankruptcy

The now bankrupt Interview magazine has hundreds of creditors lined up to get paid. Chances are none of them will get paid what they’re owed, except one, the owner, Peter Brant.

After Andy Warhol died in the late 1980s, Brant bought the magazine and is the company’s sole secured creditor. In bankruptcy speak that means he goes to the head of the line to get paid. The fact he was the owner and he loaned the company money over the years means he is most likely the only one who will get paid. The writers, artists and others who are also owed money are petty much out of luck.

According to court filings Brant floated the magazine around $8.2 million out of his own pocket. The bankruptcy trustee told WWD that in 2016, Interview, was being run led by Brant’s daughter and she guaranteed a loan from her father, “collateralized by security interests in and liens on substantially all of [Interview’s] assets and property.”

Soon after the May bankruptcy filing, Kelly Brant quit as president and in an internal memo wrote that Interview was being bought by Crystal Ball Media, a new company she and Jason Nikic, Interview’s chief revenue officer had formed.

The memo hinted the magazine will relaunch in September with Nick Haramis as editor in chief and Mel Ottenberg, Rihanna’s stylist as creative director. The memo was published by the Daily Front Row, who’s new chief revenue officer is a former Interview executive who claims he is owed $170,000 for his work at Interview.

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Estate planning doesn’t have to be intimidating

Estate planning is necessary, but many people find the prospect intimidating. Quoted by laduenews.com,  Meredith Murphy, an attorney with Smith Amundsen’s Estate and Business Planning Practice Group in Missouri said,

“Estate planning allows an individual to manage and direct where assets are to be distributed upon their death, but [it] also lets an individual plan in order to mitigate or reduce income and estate tax, protect families with young children, save money on court costs and attorneys’ fees associated with not having an estate plan, and plan for end of life,”

So what do we say? We say she is absolutely correct.

The main effect of estate planning give you peace of mind knowing that your assets have been taken care of and there will be no loose ends after you die.

Murphy is quoted again in the laduenews.com article saying,

  “After someone dies, the worst thing in the world would be to be left scrambling in the dark, not knowing where [the deceased] loved one wanted to be buried or if [he or she] wanted to be cremated, if there is enough money for the funeral and what was supposed to happen to the contents of the house or the house itself. Having an estate plan allows you to set this all out for your family and friends so that when you pass away, your family can grieve for you and not have to worry about the logistics of death like bills, funeral and taxes.”

 

 

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Medicaid & nursing homes

Under Medicaid laws, if you transfer certain assets five years before you apply for Medicaid, Your access to Medicaid can be delayed, the length of the delay depending on the amount of the transfer.

While federal tax laws allow you to transfer up to $14,000 a year without having to pay a gift tax, Medicaid still treats that as a transfer an it can delay your benefits. Any transfer you make will be looked at no matter what the amount or reason. Even if you give money for an anniversary, birthday or a charity could count for a penalty.

If, all of a sudden you become Diamond Jim Brady an start spending money that will prompt the State to look into what you are spending it on.

While most transfers are penalized, there are some that are exempt and when you go into a nursing home these won’t count against you.

You can transfer these assets to the following people and not have to worry about the waiting period.

  • your spouse
  • a child who is blind or permanently disabled
  • a trust for the sole benefit of anyone under age 65 who is permanently disabled

Also, you can transfer your home to the above people as well as the following:

  • a child who is under age 21
  • a child who has lived in your home for at least two years prior to your moving to a nursing home and who provided you with care that allowed you to stay at home during that time
  • a sibling who already has an equity interest in the house and who lived there for at least a year before you moved to a nursing home

For more info Medicaid’s transfer rules, click here.

 

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