[If anyone needs] proof of the importance of
revisiting their estate plans annually, consider the case of a wealthy family
that sold its retailing business to Best Buy.
Perhaps you have heard that 2012
is a unique year for planning. However, did you know that 2010 was just that much more unique and many families
are still either jubilant or remorseful for disrupted plans?
It just goes to show that
changing laws matter, and that your estate plans must change accordingly.
For fresh evidence of the
necessity for annual visitation of the estate plan, and for the oddities of
2010, Financial Planner magazine
recently published an article titled “Family Feud: Review Estate Plans Annually.” It’s the case of the family behind
Magnolia Audio Visual, and the couple that sold its retail rights to Best Buy
and accumulated a cool $100 million estate in the process. Unfortunately, the
parents weren’t as savvy with their estate planning.
The estate plan provided that
the maximum amount allowable under the federal estate tax threshold would be
passed down to the children, with the rest to pass to the surviving spouse to
thereby avoid immediate estate taxation. Unfortunately, the plan didn’t
account for the fact that 2010 didn’t have an estate tax (thanks to expiring
Bush-era laws and a gridlocked Congress).
The wife died. When the husband
nevertheless claimed the estate that was to pass to the children under the
estate tax planning, the children were noticeably irked. It seems they had been
passed over and were in danger of losing a fortune afforded under the
once-in-a-lifetime and quite unintended tax loophole. Accordingly, the children
filed suit against their father on the grounds of “non-compliance, forgery and
the use of undue influence.”
If nothing else, this case
illustrates the necessity to revisit estate plans with greater frequency,
especially in these uncertain financial times.
Planning (September 1, 2012) “Family Feud: Review Estate Plans Annually”