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Avoid these common estate plan pitfalls

Even though it might seem that celebrities would have an easier time with estate planning because of their large fortunes, many wealthy and famous people are led astray by poor advisers. Mistakes among the richer set can help us avoid our own missteps, however. Today we will discuss strategies that can help prevent your estate from falling into the same pitfalls that besieged these celebrities' holdings.

Leona Helmsley, widow of a renowned real estate magnate, died as a multibillionaire. In keeping with suggestions that we have often broached on this blog, the woman made provisions for her pets, putting a significant amount in a trust for her dog. It appears that the woman simply did not understand how much money she had, however; she left $12 million in a trust for her dog and effectively disinherited two of her grandchildren. A settlement reduced the amount of money allocated to the woman's dog, providing a $6 million settlement for the two younger relatives. The moral of this story: Know just how much money you have before you make major estate planning decisions.

Another tragic example of poor estate planning involves Steve McNair, who was killed by his girlfriend without having ever drafted estate documents. The man left behind a wife, several children and a mother whom he was supporting. Sadly, the man's mother was displaced from his estate, his holdings were subject to massive taxes, and his family ended up with a small share of his assets. McNair was young and in the prime of health, but he still should have thought about estate planning.

Other common mistakes among celebrities include failing to allocate money for tax bills and putting trust responsibilities in the wrong hands. Your will and other estate planning documents allow you to decide appropriate beneficiaries and amounts. If you fail to draft these documents, or if your estate plans are incomplete, your estate could be divided in a way you would not prefer. Careful consideration by a probate attorney can help you avoid this undesirable situation.

Source:  www.foxbusiness.com, "Monumental Estate Planning Blunders of 5 Celebrities" No author given, Jun. 06, 2013