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    Sword and Shield Estate Planning

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3 Minutes Read

The Inner Workings of Revocable Trusts

Matthew Perry, renowned for his iconic portrayal of Chandler Bing on the beloved TV series Friends, passed away unexpectedly at the age of 54. Unmarried and without children, he left behind grieving parents, five half-siblings, and countless devoted fans. In contrast to many high-profile cases, Perry's estate plan, managed through a revocable trust, suggests a potentially smooth transition of his substantial $120 million fortune.


While the absence of a public legal battle may seem unremarkable, the lessons drawn from Perry's situation emphasize the importance of a comprehensive estate plan tailored to individual needs. Despite having a revocable trust, Perry lacked a will, a document often crucial in celebrity cases where chaos ensues due to the absence of proper estate planning. Perry's choice of a revocable trust, however, circumvents the typical challenges associated with celebrity estates.


A revocable trust acts as a will substitute, negating the need for probate, providing centralized asset management, enabling disability planning, and safeguarding the privacy of the deceased, the plan, and the beneficiaries. By opting for a revocable trust, Perry ensured confidentiality and avoided the probate process. However, a holistic estate plan typically involves both a will and a revocable trust, each serving distinct functions. The will, besides nominating guardians for minor children, serves as a backup to the trust, directing the distribution of assets not retitled before death.


While the specifics of Perry's asset distribution remain private due to the trust's confidentiality, potential tax implications arise. With an Applicable Exclusion Amount of $12.92 million at the time of Perry's passing, about 10% of his net worth, the remaining 90%, roughly $107 million, may be subject to a 40% estate tax, resulting in a substantial federal estate tax bill of approximately $42.8 million. The trust's terms, undisclosed to the public, could have mitigated this tax liability, possibly through charitable beneficiary provisions.


Shortly after Perry's death, the National Philanthropic Trust established the Matthew Perry Foundation. Had Perry incorporated this foundation within his trust or as a separate entity, it could have offered significant tax savings through charitable deductions, highlighting the potential benefits of thoughtful estate planning.


Celebrity estate cases serve as insightful examples of the complexities arising from inadequate planning. Perry's situation reinforces the universal need for estate planning, regardless of estate size. Consulting with a qualified estate planning attorney, who may recommend revocable living trusts to avoid probate and provide additional protections, is crucial. Perry's legacy could have been further solidified through proper planning, perhaps with the establishment of the Matthew Perry Foundation or another charitable initiative. A qualified estate planning attorney ensures that your legacy aligns with your wishes, earning you the enduring gratitude of your loved ones – a testament to being a true "Friend" in life and beyond.


One of the most common missing pieces in estate planning is the absence of a well-drafted and up-to-date will. Many people may establish trusts or other components of an estate plan but overlook the importance of a will. A will serves as a crucial document that outlines your wishes regarding the distribution of assets, appointment of guardians for minor children, and other key decisions after your passing.


Without a will, the distribution of your assets and the guardianship of your children may be subject to the intestacy laws of your state, which might not align with your preferences. This can lead to disputes among family members and prolonged legal processes.


While other components like trusts, powers of attorney, and healthcare directives are essential, having a comprehensive and properly executed will is often the foundation of a well-rounded estate plan. It ensures that your intentions are clearly communicated and can help streamline the administration of your estate. It's crucial to regularly review and update your will to reflect any changes in your life, such as marriages, divorces, births, or changes in financial circumstances.

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