Dear Clients, Colleagues, and Friends,
So your estate planning is in order. You have a will; every loved one is accounted for; and your estate will be passed on in accordance with your wishes.
Or will it?
The great Frank Gifford died on August 9, 2015. He was 84 years old. He was a football player for the New York Giants, and then a television sports announcer and commentator. He was a resident of Greenwich, Connecticut at his death. He had three marriages, and five children from two of them, one with special needs. His latest marriage was to Kathie Lee with two children, Cody and Cassidy. His estate is estimated to be worth more than $20 million. Gifford left a will dated July 29, 2014.
As we explore the what-if’s in the article below, there are a few teaching moments and lessons learned about estate planning and asset protection afforded by wills, blended families, non-community property law states, tax exemptions, trusts, and trustee powers. For the full article on Frank Gifford’s estate planning by Bruce Steiner from Steve Leimberg’s Estate Planning Newsletter #2361, click here, though highlights and excerpts are found below:
Wills
A will is a public document. As can be seen in the article, every detail of a will becomes public knowledge when a will passes through probate and a court oversees the administration of the will to ensure that the will is valid and the property gets distributed the way the deceased wanted. A will covers any property that is titled in your name when you die. So use a living trust to hold your property and there is no probate required for the assets titled in the name of the trust.
Blended Families
Since Gifford had children from a prior marriage, he had to consider how he wanted to divide his assets among Kathie Lee, the children of his marriage to Kathie Lee, and his children from his first marriage. If Kathie Lee had children from her previous marriage, she may have left them a share of her assets, including what she inherited from Gifford. In that case, Gifford might not have wanted to give Kathie Lee the same degree of control and access over his assets.
Connecticut Estate Plans
In larger estates, the typical estate plan for a married person in Connecticut, where there is only a $2 million estate tax exemption, is to shelter the entire Federal estate tax exclusion amount ($5,430,000) and then to leave the balance of the estate to the spouse, either outright or in a QTIP (Qualified Terminable Interest Property) trust. While that results in the payment of some state estate tax in the first spouse’s estate, it shelters from death taxes the maximum possible amount, together with the income and growth thereon during the spouse’s lifetime from Federal estate and gift tax. A life insurance policy could quite simply cover the state death taxes.
Tax Exemptions
The Federal estate tax exclusion amount of $5,430,000 is indexed for inflation. It is scheduled to increase to $5,450,000 in 2016. There is no tax on transfers between spouses. There is also portability for Federal estate tax purposes, so that if Gifford did not use his entire estate tax exclusion amount, Kathie Lee could get the benefit of the DSUE (deceased spousal unused exclusion) amount. However, the DSUE amount is not indexed for inflation, and there is no portability for the generationskipping transfer (GST) tax or for Connecticut estate tax purposes. But there are various planning options to be considered here.
Trusts and Trustees
A will does not cover property held in joint tenancy or in a trust as property owned in joint tenancy when right of survivorship passes to the survivor by operation of law, and assets owned in a trust are governed by the terms of the trusts. Assets held in a living trust pass outside of probate, so a court does not need to oversee the process and your neighbors, friends, and the public will not get to see what you owned when you died. Unlike a will, which becomes part of the public record, a living trust can remain private. If Gifford wished to keep his affairs private, a trust would have accomplished his goals.
Conclusion
The ultra-affluent family and successful business owner should take the opportunity to review the many options for estate planning. Expert advisors are available to help make the best choices. Annual attorney review of your planning is essential. Please contact us for guidance in pursuing connections to the best-inbreed strategic advisors as well as guidance with comprehensive estate planning and asset and lifestyle protection.
Jeffrey M. Verdon, Esq.