Phillips Seymour Hoffman left behind a $35 million estate after his tragic death. While most Americans do not have an estate of this size, there are still lessons to be learned from his estate planning mistakes.
Mr. Hoffman was not married to his longtime girlfriend and mother of their children Mimi O’Donnell. His will created a trust for his oldest child, and the rest of his estate was left to O’Donnell. However, because they were not married, almost 40% of the estate could be subject to state and federal taxes. If they had been married, an estimated $12 million would have gone to O’Donnell and not to the government. While estate planning should not be a deciding factor in the decision to get married, estate planning laws make it much easier for those who are married.
Mr. Hoffman also made the mistake of not updating his estate plan. At the time his will was created he only had one son, but at the time of his death he also had three daughters. After a major life event such as a marriage, birth or divorce, it is important to update your estate planning documents.
Finally, Mr. Hoffman used a will to create a trust in planning his estate. If he would have used a revocable inter-vivos (i.e. living) trust in his estate planning, the details of his estate would not have been made public.