Estate planning is essential for adults of all ages. This is especially true for married people who have children.
When you hear about tragic circumstances that befall others because of estate planning error you understand why everyone should have a good estate plan. We are all day to day as they say in the sports world. This is simply the human condition, and there is nothing anyone can do about it.
Ordinary people should certainly take steps to make sure that their spouses and children are provided for, but wealthy people have yet another layer of concerns.
The estate tax can absorb a significant percentage of the wealth that you are leaving behind if you have assets that exceed the exclusion amount. At the current time the maximum rate of the federal estate tax is 40 percent, and here in New York we have a state-level estate tax as well.
THE STEVE MCNAIR ESTATE
With the Super Bowl behind us, here’s the story of a football player who did not take his estate planning game seriously. The onetime football star Steve McNair was killed in 2009, and he was paid extraordinarily well as a top rate NFL quarterback for years. He had not taken the time to execute a last will or any other type of an estate plan.
His assets were subject to estate taxes. This is one of the reasons why his resources were frozen in probate after he passed away. Because he didn’t have an estate plan he hadn’t positioned his assets with tax efficiency in mind.
When you draw up a last will you should consider the matter of estate administration. Somebody has to actually do all the legwork as it were to make your wishes a reality.
This individual is called the executor or executrix. An executor is a male who serves this role, and a female estate administrator is called an executrix.
In cases when someone dies without having executed a last will the Surrogate’s Court is forced to name a personal representative to handle the estate administration tasks. In the case of Steve McNair his widow was named the personal representative.
McNair had a home built for his mother in Mississippi years before his death, a ranch that sits on 45 acres. She was under the impression that this ranch was a permanent gift to her.
McNair’s surviving spouse didn’t see it this way at all because the house was in her deceased husband’s name. As the personal representative of the estate she had the right to demand rental payments from Steve McNair’s mother. She asked $3000 a month in rent.
Unfortunately, Lucille McNair could not produce this type of money on a monthly basis to remain in the home. She moved out, and she took her belongings with her.
McNair’s widow took things a step further and demanded that Lucille pay over $50,000 to account for the things that she took, though the late quarterback’s mother says that these items were her personal property.
It is unlikely that Steve McNair wanted his mother treated this way, and he could have prevented it with the proper estate planning.