The untimely death of actor Philip Seymour Hoffman and subsequent publicity about his $35 million estate caused tax attorney Rob Wood to think about what people can learn from Mr. Hoffman’s estate plan. He comments here on his Forbes article “New Clues In Philip Seymour Hoffman's Costly Estate Plan.”
Hoffman’s estate situation, like those of James Gandolfini, Heath Ledger, and Amy Winehouse, shines a light on what sometimes happens when someone dies much earlier than might have been expected. One of the most interesting aspects of Hoffman’s situation is that he was not married to the mother of his three children.
Hoffman apparently did not believe in marriage, Wood notes, and that belief, however principled, will be costly. Because Hoffman was single, his estate will pay about $15 million more than would have been the case had he been married. But notwithstanding the tax consequence, Wood opines that “you have assets going to the people you want them to go to.”
In Hoffman’s case, he left the money to Marianne O’Donnell, the mother of his children, and counted on her to take care of the children. Hoffman did not want his children to be “trust fund kids.” Wood points out that it can be difficult to plan for the passing of assets to children. “Any time you put major assets in the hands of a twenty-one-year-old, it’s probably a mistake.”
Spousal tax treatment is probably the most interesting part of this situation. Spouses are treated differently under the income tax law and estate tax law than others. The gay marriage discussions sometimes focus on this point.
For more information on the subject, please refer to Mr. Wood’s article in Forbes. Robert Wood is a tax attorney with Wood, LLP in San Francisco, California and spoke with The Tax Law Channel, an affiliate of The Legal Broadcast Network. The Legal Broadcast Network is a featured network of the Sequence Media Group.