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Whitney Houston: Estate planning lesson in a sad, untimely death
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I found this article, by Liz Skinner published in Investment News on February 19 to be an interesting warning of potential financial issues caused by lack of planning.
Joe
At this point, it is too early to say what kind of shape Ms. Houston's estate was in when she died.
But the six-time Grammy winner, who died Feb. 11 in a Beverly Hills hotel at 48, had a will that names her only child, 18-year-old Bobbi Kristina Brown, as the main beneficiary, press reports quoted a family friend as saying.
"At the very least, hopefully, a revocable living trust was set up and, even better, a series of trusts that are funded by the estate's assets," said Andy Mayoras, a Michigan estate planner. "Would you want your 18-year-old daughter to inherit everything in a lump sum?"
Along with setting up insurance policies to fund the trusts, Ms. Houston should have updated her will, any trusts and her insurance beneficiaries after her 2006 divorce from R&B singer Bobby Brown, Mr. Mayoras said.
Ms. Brown is the only child from their relationship, though Mr. Brown reportedly has five other children from different relationships.
Life events
Along with divorce, any life event such as the birth of a child, a move across state lines or remarriage should spark an updating of estate documents, Mr. Mayoras said.
Even without such changes, a wealthy client should review those documents every three to five years to account for new real estate or business ventures and to make sure that all assets are funded, said Mr. Mayoras, who co-wrote "Trial & Heirs: Famous Fortune Fights" (Wise Circle Books, 2009).
The estate planning that celebrities and high-net-worth clients require is complex and time-consuming, and that is often why it isn't done, advisers said.
Celebrities are used to having things done for them, and they don't want to devote the time to reviewing their situation, said Jeremy Kisner, president of advisory firm SureVest Capital Management, which has some celebrity clients.
The planning also requires stars to make hard decisions about whom to support - and with how much - as well as how to deal with estate- or tax-planning changes that may require them to give up some control and flexibility, he said.
"I find that especially with celebrities, they start the planning but never actually finalize it. This type of planning isn't just done over a lunch meeting," Mr. Kisner said.
A number of music industry stars have died without completing a will. That list includes Sonny Bono, John Denver, Jimi Hendrix and Bob Marley.
Ms. Houston, the 20th-top-selling artist in the United States of all time, with 55 million records sold, hopefully realized the importance of proper estate planning as a result of the scuffle between her and her stepmother when her father, John Houston, died.
Stepmother Barbara Houston sued Ms. Houston in 2008 over a $1 million life insurance policy that Mr. Houston left to his daughter. Barbara Houston said the policy was supposed to pay off the money that John and Barbara had borrowed from Whitney Houston to buy their New Jersey condo.
The younger Ms. Houston, who held the mortgage on that property, countersued and asked for repayment of the mortgage with interest. In December, an appeals court judge ruled in the singer's favor because her stepmother didn't have any signed documents to prove the insurance policy was meant to cover the mortgage loan.
"You should never name anybody as the beneficiary of a life insurance policy unless you want that person to keep the money," Mr. Mayoras said.
Details of the financial state of Ms. Houston - who signed a $100 million record deal in 2001 but also admittedly suffered with drug problems - are being closely held by the family, which buried the star Saturday. The cause of her death isn't expected to be known for a couple more weeks.
Regardless of its current value, Ms. Houston's estate is expected to gain from the giant boost in song sales since her death, the August release of a movie she filmed with Jordan Sparks called "Sparkle," all future projects involving her unreleased recordings, as well as sales from other assets, including a Mendham, N.J., mansion reportedly on the market for $1.75 million.
"There were rumors that she was broke, but that will certainly change," said Lynnette Khalfani-Cox, contributing editor to Moneyrates.com. "We can expect at least a seven-figure increase to her estate, maybe more."
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Helpful tools for preparing your 2011 tax return.
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We prepare over 300 tax returns for our clients every tax season and would be pleased to assist you with yours. However, if you're one of those who prefers to go it alone, or if you're already working with another tax professional, we want to offer a couple of helpful tools that will save you time and streamline the process. If you plan to use either the web-based or desktop version of TurboTax, you can now import your tax information from Investor360˚. With just a few short steps, all the key tax data you need are safely, accurately, and easily transferred directly into your electronic return.
With Investor 360˚ and TurboTax, you'll do away with:
the need to gather together a year's worth of statements
the task of keying in data from multiple sources
the worry associated with either missing or incorrectly transcribing important tax information. Click here for step-by-step instructions As you may already know, one of the more difficult schedules to create is the one required to claim the portion of dividends earned from U.S. government securities, which may be tax exempt at the state level (Ohio, for instance).
Chornyak & Associates tax professionals have prepared an Excel worksheet to assist in this calculation, which we would be happy to e-mail to you or your tax professional for use if requested.
We are pleased to provide a full service of financial and tax planning assistance to our clients, so don't hesitate to ask for our help. Contact us by phone at 614-888-2121, toll-free at 877-389-2121, or e-mail chornyak@chornyak.com.
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Chornyak & Associates named among the top financial advisors in Ohio
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We are proud to have been named among America's top
1,000 financial advisors for 2012 by Barron's magazine. Our firm was also listed in the Top 25 in Ohio.The listing is based on assets under management, revenue the advisors generate for their firms and the quality of their practices.
Barron's notes: "The typical profile of a Top 1,000 advisor hasn't changed much since last year's ranking. They average 52 years old, have been in the investment business for 25 years and have been with their current firm for 19 years."
This is a prestigious award that we are honored to receive, but it wouldn't have been possible without you, our valued clients. Be assured that we will continue to offer you the outstanding customer service that has been the major force behind our growth.
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What's happening now
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Saks' Fifth Avenue earnings are up 48% thanks to online shopping. CEO Steve Sadove told CNBC he's encouraged because the luxury shopper appears to be back.
83% of American adults own some kind of cell phone. 73% of cell owners use their phones for text messaging and taking pictures.
The chairman of Aetna Insurance announced that the end of profit-driven health insurance companies is near. "The system doesn't work, it's broke today," he sauys.
49% of social-networking-site-using adults said they have seen mean or cruel behavior displayed by others at least occasionally. They usually respond by ignoring it.
10 places where a gallon of gas is more expensive than in the U.S. Hint: Dubai isn't one of them.
The 2001 Pontiac Azteck named the worst car of all time. The 1971 Chevrolet Vega only came in number five!
Seven little-known Social Security benefits. Stay married for at least 10 years.
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March 2012
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The tragic death of one of the country's great entertainers signals an area that I'm constantly emphasizing to our clients: the necessity of early estate planning. As this month's lead article points out, a life event such as divorce, a move across state lines, or remarriage should spark an updating of estate documents. For all of you TurboTax users I want to make sure you know about a convenient feature of our Investor 360˚link, that when used with TurboTax, may save you a lot of time. With just a few short steps, all the key tax data you need are safely, accurately, and easily transferred directly into your electronic return. Be sure to read the article for more information. I wanted to let you know that Chornyak & Associates has been listed among the top investment advisors in the country by Barron's magazine. I'm pleased to mention also that we placed among the top 25 in Ohio. These are important rankings that we're proud to be part of. In closing, this month's "What's happening now" section contains information to entertain and inform. Did you know, for example, that cell phone penetration among Americans is now up to 83%? Please feel free to give me a call or send an e-mail with any questions you may have on your personal investment planning: 614-888-2121 (or toll free 877-389-2121), e-mail:
Sincerely, Joe
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