Famous Celebrities who Failed to PLAN

While these accounts highlight the horrors of improper estate planning for celebrities and they get the press, what about the average affluent American? You know who I'm referring to; the neighbor down the street, associate, friend and relative who has a net worth in excess of $1 million they're considered wealthy, affluent. Tragically, most are no better off than Senator Kerr, Karen Carpenter, Jerry Garcia, Sammy Davis Jr or even Elvis. In fact, statistics show that 70% have no logical plan to distribute their wealth from one generation to the next. They play right into the hands of the Federal Government. It's lunchtime for the hungry agents of the IRS and they're eating fast food and plenty of it.

Huge Estates: Good vs Bad Estate Planning

Nate King Cole
Economic Recovery Tax Act of 1981, commonly called ERTA. ERTA afforded substantial relief to many Americans in such areas as income taxes, capital gains taxes, and gift taxes. The most significant relief was in the area of estate taxation, the assessment you pay to transfer your estate to your heirs.Prior to ERTA, the tax rate on an estate valued over $60,000 started at 32 percent and quickly escalated to 75 percent. We distinctly remember hearing the sad story about the severe loss of Nat King Cole's estate during that time. When Mr. Cole passed away, his estate was valued at over $3.5 million. Unfortunately, after estate taxes and settlement costs, his daughter Natalie received less than $1 million.The real tragedy of pre-ERTA estate taxes, though, was felt by land owners, particularly farmers. Because farmers traditionally kept little cash on hand, the surviving spouse was often forced to liquidate a major portion of the farm to cover the enormous estate tax bill.

Sammy Davis Jr.

In 1990 the world lost one of it's greatest entertainers, Sammy Davis Jr. He thrilled audiences for years with his incredible talents. Unfortunately he failed miserably in one area--the ability to plan and manage his finances.Recently in the news, Sammy's wife Altovise was forced to hold an auction in an effort to raise the $7 million federal estate tax bill he left behind. With the help of a fund raiser she sold literally every personal memento from his tap shoes, to his gold record award for the hit song The Candy Man. The event was a success, but raised only $439,000, only a fraction of the massive tax bill. It certainly was not Sammy's goal to leave his wife with massive estate tax debts, but like most Americans he simply did not have a plan.

Jerry Garcia

Jerry Garcia, Mr. "Deadhead" himself, Jerry Garcia, the lead guitarist and lead singer of the Grateful Dead. As USA Today reported, "Even before Jerry's ashes had been scattered in the Ganges, his estate "was being picked over like a yard sale. Current and past wives, jilted lovers, family members, his acupuncturist, car dealer and personal trainer all were jockeying for a piece of the multimillion dollar spoils. One claim against Garcia's estate was even filed by a guy who said he spent time 'babysitting' the rock star during a drug binge." Much to the dismay of his rightful heirs, Jerry felt he was immortal, so why plan.

Karen Carpenter

Karen Carpenter, her voice was incomparable and her songs inspirational. Karen topped the charts with "We've Only Just Begun", and her successful career created an estate worth over $6 million. Unfortunately, Karen will be ranked amongst those who failed to plan.It should be noted that Karen did not completely forget to plan for her estate. No, in fact she was responsible enough to leave $2,721 in the bank, should any estate settlement expenses arise. For some reason she assumed that things would take care of themselves and the $2,721 she had in the bank would cover her debts. The result because her assets were illiquid and she only had $2,721 in cash, her family had to sell virtually everything and watched her fortune shrink by 58% simply because she failed to plan.

Elvis Presley

Elvis Presley Even the legendary Elvis Presley thought he didn't need to worry about the estate settlement costs. When he died he left an estate worth more than $10 million, but only $3 million went to his daughter, Lisa. A full 70% got sucked away through probate expenses and estate taxes that could have easily been avoided with some simple planning.


James Brown
http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20070910/FREE/70905021/-1/INIssueAlert04&ht=james%20brown%20james%20brown%20james%20brown

Great Planning!
Henry J. Kaiser Jr., the Executive Vice President for Kaiser Industries left a Gross Estate of $55,910,373. Henry had the foresight to set up several estate planning techniques. 1. He purchased a life insurance policy. 2. He had the stock in his corporations transferred before his death out of his estate into a trust, all with separate property; which after death was charged with paying all taxes, allowances and claims of decedent, and balance to Kaiser Family Foundation, a charitable organization. See Charitable Remainder Trust and Family Foundations, to see how you too can use the same techniques as Henry J. Kaiser Jr.

Bad Planning
Howard Gould, the last surviving son of Jay Gould, the famous railroad builder left a gross estate of $67,535,386. He did absolutely no planning and could not use a marital deduction because of divorce. He incurred a whopping $52,549,682 worth of estate settlement costs, leaving only $14,985,704 to his heirs. That's losing nearly 78% of his estate to settlement fees and taxes! In fact, $36,648,229 went to pay for Federal Estate Taxes making Howard one of Uncle Sam's most favorite tax payers. Congratulations Howard!* "Your Estate Research Service", Longman Group USA Inc., Longman Financial Services Institute, Inc. 1990.