BRIDGES A newsletter for Carolinians on transitioning family wealth, wisdom & values

September/October 2014

In this Issue:

Pages 1 & 2

Another Celebrity Creates a Bad Will Thank You

Page 3

Fun Facts About Fall, Upcoming Workshops

Page 4:

Get to Know the CFEP Team

Carolina Family Estate Planning 51 Kilmayne Dr., Suite 203 Cary, NC 27511 919-443-3035 Carolinafep.com NCwillsandtrusts.com Facebook.com/carolinafep

Practice Areas:

Wills & Living Trusts

Asset Protection Trusts

Long Term Care Planning

Medicaid Planning & Qualification

Veteran’s Aid & Attendance Benefits

Children’s Safeguard Planning

Probate & Estate Administration

Trust Administration This publication is intended to educate the general public about estate planning, elder law, asset protection and related issues. It is not intended to be legal or tax advice. The information in this newsletter may be freely copied and distributed as long as the newsletter is copied in its entirety.

reports state, Hoffman didn't believe in the institu-

tion. And therein lies one of the big problems with

his estate.

Because they were not wed, O'Donnell does not

qualify for the marriage exemption on inherited

assets. Instead of the entire $35 million passing to

her tax-free, Forbes reports, she only qualifies for

the federal estate tax exemption for the first $5.34

million - leaving the other approximately $30 mil-

lion fully taxable. Clearly, being married is in your

clients' best interests. http://tinyurl.com/mklfs6s

By federal law, the rest of Hoffman's estate is tax-

able at up to a 40 percent rate. On top of that, New

York has its own estate tax, up to 16 percent for non-

spouses with only a $1 million exemption. Accord-

ing to Forbes, that leaves Hoffman's estate owing up

to $15 million in taxes. As DailyFinance says, not

being married cost O'Donnell and her children $12

million that will go to the IRS.

http://tinyurl.com/lpo9qej

From a tax standpoint, Hoffman's case isn't that far

removed from the estate mess actor James

Gandolfini left when he died. In Gandolfini's case,

his poor planning left his estate owning up to $30

Another Celebrity Creates a Bad Will Philip Seymour Hoffman was a talented, Oscar-

winning actor and a troubled man. When he died

from an apparent heroin overdose in February, he

left behind his long-time partner, Mimi O'Donnell,

and three pre-teen children they had together.

He also left behind an example of estate planning

gone wrong, a cautionary tale of what you

should not do when setting up your final affairs.

For despite his wealth - an estimated $35 million -

Hoffman provided no direct financial security for

son Cooper and daughters Tallulah and Willa. Not

wanting to have his children grow up, as he told his

lawyer, "trust-fund kids," Hoffman left them noth-

ing in his will, instead leaving his entire estate to

O'Donnell.

Unwed Despite being long-time partners, Hoffman and

O'Donnell were never married, because, as numeous

Continued on Page 2

Some of you are long time readers of our newsletter, but we’ve also added many new readers over the years and thought

it might be fun to start a “Get to Know the CFEP Team” series. Each month we’ll feature one of our team members.

Featuring: Lorraine Davis, Client Services Administrator

About Lorraine! Married for 37 years to her husband and high school sweetheart Keith.

They have one son, John and a daughter-in-law, Morgan.

They have two dogs; a Corgi named Cosmo (after her favorite drink) and a Golden Retriever

named Lucky.

What do you enjoy to do in your free time? I really love cooking and baking. I also enjoy decorating both my home and other people’s

homes and you can often find me shopping. Something unique that I do in my free time is make

hand-made cards. I love crafting for myself and for other people and I create an assortment of greeting cards that range

from birthday cards, to thank you cards, to invitations.

Do you have a favorite recipe or meal that you like to make? I love grilling chicken, steak and bacon, However, my favorite meal is Jambalaya, which my two friends from New Or-

leans taught me how to make from scratch.

Are there any books or films that have recently caught your attention? I recently watched Winter’s Tale and really enjoyed that movie. It’s an interesting and complex story about a thief who

unexpectedly falls in love with an ill girl.

Where is your favorite place to visit for vacation? Ocean Isle is my favorite place to vacation and I visit there often. I love that it is close-by and that we can take the dogs

there and just hang out on the beach. We often go with friends or family and always rent a house by the water.

CAROLINA FAMILY ESTATE PLANNING

51 Kilmayne Dr., Suite 203

Cary, NC 27511

Phone: 919-443-3035

Fax: 919-324-6987

www.CarolinaFEP.com

Estate Planning Gone Wrong! Look inside for more details.

You Go Out of Your Way to Care and Provide for Your Family…

But Have You Protected Them If Something Happens to You?

Carolina Family Estate Planning’s Free Workshops

Carolina Estate Planning Learning Center: 51 Kilmayne Dr., Suite 203, Cary, NC 27511

www.carolinafep.com

The most important document that everyone needs

How to protect your spouse and children from lawsuits,

creditors,

divorce, remarriage and similar concerns

Strategies to have the advantage in tax and probate issues

Steps you can take now to save $$$ in costs later

How to protect your home & assets from long-term care

costs

How to make sure your spouse or children are not left

financially ruined if you need nursing home care

Recent US Supreme Court case that puts the future of

your IRAs at risk

How to provide for minor children or grandchildren

Finally, because the marital deduction doesn't apply,

assets left when O'Donnell dies could get taxed again.

A principled stand on marriage is one thing, but being

willfully financially irresponsible is another thing

altogether.

Daddy dearest?

Hoffman made out his will in 2004 when son Cooper

was then about 1 year old - and then never revised it.

Several reports say that the will set up a trust for Coo-

per, but it was in effect only in the event that O'Don-

nell died before Hoffman. Daughters Tallulah and

Willa are not mentioned in the will.

Clearly, the lesson for our clients is to update your

wills and estate planning documents every time a life-

altering event occurs, be it marriage, divorce, the

birth of a child or a business venture that takes off.

Hoffman's desire that his children not live as trust-

fund kids is fine in principle but nearly negligent in

practice. We've all heard the tales of trust-fund kids

growing up with an unearned sense of entitlement

that leads to all manner of personal and legal prob-

lems, from drug abuse to flouting the law. But it's not

like Hoffman had to set his kids up for life; famously,

billionaire Warren Buffett has said he isn't leaving his

children his vast wealth, instead giving them the tools

to succeed - or fail - on their own.

Hoffman wasn't a billionaire, but making provisions

to have his children's college education paid for

would seem reasonable at the very least. By not pro-

viding for them directly in his will, his children are

left potentially financially vulnerable.

Of course, Hoffman could have provided other

financial protection for his children, through re-

tirement accounts, custodial bank accounts or life

insurance polices - none of which, Forbes says,

are covered by a will. Gandolfini left his son a $7

million life insurance policy, which is not subject

to taxes.

Mommy dearest?

Clearly, by leaving his estate to O'Donnell, he ex-

pected she would provide for their children. And

there's no reason to believe she won't. After all,

she kicked Hoffman out of their $4.2 million

apartment because of his heroin use. However,

there's nothing to stop her if she decides to blow

through the money, leaving nothing for the kids.

And what happens to the children if she marries

someone else? If O'Donnell dies while married,

her wealth passes to her spouse, who could cut

Hoffman's children out completely. That's surely

not what Hoffman would have wanted, but unin-

tended consequences have a way of shaping peo-

ple's lives - for better or worse.

We hope this information was useful to you and

helps you and your families. If you have a spe-

cific case or a question, don't hesitate to call our

office at 919-443-3035.

Kenn Buckner

Courtney Campbell

Nick Cirillo

Tayler Dalpe

Jayme Dimitroff

Jason Jonczak

Rob Larson

Joel Ledbetter

Scott Lord

Manfred Odenwald

Dave Reynik

Salvatrice Squeri

Sarah Tansen

Dan Thomason

FUN Facts About FALL

1. September 22 is the autumnal (fall) equinox. There are two equinoxes each year and the other is in March at the

start of spring.

2. On this date the day and night are each about the same length. The term equinox comes from the Latin for

“equal night”.

3. In Greek mythology this was supposed to be the time when Persephone rejoined Hades in the underworld.

4. The Chinese celebrate the Moon Festival around this time with particular emphasis on being thankful for the

success of the summer harvest.

5. One of the visible signs of fall is the changing color of the leaves. This happens because photosynthesis stops

during this period so leaves do not stay green.

6. Favorite fall fruit and vegetables include apples, spinach, squash, bell peppers and, of course, pumpkin.

7. The custom of bobbing for apples originates from Roman times.

8. Evergreen trees remain green through the winter because they have waxy leaves which do not freeze.

9. During this period birds prepare for winter migration. One of the longest migrations is the 11,000 mile journey

by the Arctic Tern. However, the bar headed goose is also impressive reaching heights of 28,000 feet to skim

over the Himalayas.

10. While we call this season ‘fall’, the British call it ‘autumn’. Both words date from around the same period in the

16th century. Before these terms came into use, this period was called ‘harvest’.

Tuesday, Sept. 23, 6:30pm; Thursday, Oct. 9, 6:30pm & Thursday, Oct. 28, 6:30pm

You’ve spent a lifetime building your savings & taking care of your family, but what would happen if you fall ill or pass away?

Join us for this free workshop to make sure you’ve protected them and discover:

These free workshops fill up quickly — Registration Required! Signup online or Call!

Register Online (see all our workshop dates): http://www.carolinafep.com/library/events/

Call Today: 919-443-3035

It’s Not Too Late!

Join the Carolina Family Estate Planning Team in

the ‘Walk to End Alzheimer’s’, Sat. Sept. 20th

Sign up on our Facebook Page!

www.facebook.com/CarolinaFEP

We invest 100% of our time and energy to delivering

first-class service to our clients. As a result, our valued

clients, partners, and friends refer their family, friends

and associates to us. We’d like to take a moment to

thank these individuals:

Thank you for introducing your friends & family to our office!