Carley’s Corner - Philip Seymour Hoffman’s $12 Million Dollar Mistake
Philip Seymour Hoffman, born July 23rd 1967, was an American actor, director and producer. Hoffman worked in the film industry for 22 years and was best known for his roles in films such as The Big Lebowski, Almost Famous, The Hunger Games, and The Talented Mr. Ripley to name a few. Philip was a world-renowned actor and had received countless awards throughout his career such as an Academy Award, British Academy Award, Golden Globe, and a Screen Actors Guild Award along with countless additional nominations.
On February 2, 2014, Phillip Seymour Hoffman passed away at the age of 46 from a combined drug intoxication, the news of his death shook the film industry. Hoffman was described in his obituary in New York Times as “perhaps the most ambitious and widely admired American actor of his generation.”
When Hoffman passed away, he was survived by his girlfriend Mimi and their three children who were all under the age of 10 at the time of his death. He had a Will drafted, and had chosen to leave his entire estate to Mimi with the expectation that she would provide for their children, and ensure that they were exposed to the arts industry in major cities around the world. Hoffman had been very vocal during his lifetime that he would not have “spoiled trust fund children”, which explained why he had chosen to leave the entirety to Mimi.
There was one problem in Hoffman’s estate plan – he and Mimi were never officially married. Had they been married; the entirety of the estate would have passed to Mimi tax-free in the USA. As it was, the estate had to pay about $12 million in estate tax, which was roughly 1/3 of the estate’s value all due to poor tax planning!
Creating trusts for Mimi and the kids would have provided protection for their assets. If the pair preferred to not marry, the use of trusts and other estate planning devices would have minimized, if not completely removed, the tax burden on Hoffman’s estate. California, where the couple had lived, has one of the highest capital gains taxes in the world. Proper income tax planning could have reduced the tax burden for years to come and could have possibly eliminated this $12 million mistake.
The biggest lesson that we can take from the Estate of Philip Seymour Hoffman is to speak with estate planning professionals about your goals for your estate plan, and to ask for help when it’s needed. A professional can help you understand the best way to achieve these goals as well as the tax and legal obligations associated with these goals. When it comes to your estate and the legacy that you leave behind – it’s best to be fully educated!
Do you have questions, or find yourself needing guidance with estate administration? Contact us today to ease life after death.
This blog is not intended to be legal advice and should not be relied on as such. If you require legal advice, please contact a legal professional concerning your particular circumstances.