Probate is Hardly the Story:
Chad Boseman’s More than a Million Dollar Legacy
The media is in a frenzy over the late Black Panther’s real-life wife, Taylor Simone Ledward, filing for probate on an estate allegedly just under a $1 million. First, the news claims the probate is necessary because he died without a Will. To the contrary, a Will does not prevent probate. A Will designates who will administer your assets that are subject to probate. More importantly, the story highlights one key detriment of probate – the filings are generally public records. Distribution details and assets in trusts, even revocable ones (so the grantor and the trust are the same during life) are private.
Probate assets are those assets without beneficiary designations and that don’t automatically pass to beneficiaries otherwise. Some common non-probate assets may be life insurance policies, jointly held bank accounts, retirement accounts, and assets held in trusts, or other instruments. Probate assets are everything else – jewelry, houses, furniture, art, wares, non-designated bank accounts, cash, cars, farm equipment, and even pets and other animals (another reason pet trusts are helpful, by the way).
On another news story, Boseman’s net worth (unverified) was estimated to be $12 million. He is also reported to have donated over $4 million to charities, predominantly to hospitals serving Black communities. Both of these likely exclude Boseman’s remaining assets, especially anything with beneficiary designations or in a business entity, and likely, other very valuable assets – his rights of publicity, his written works, his remarkable theatrical plays, and his creative and charitable endeavors that endeared the public to his larger than life persona. The difference between a $1 million estate and an $8-12 million estate is significant. While certainly possible and with Boseman known for this generosity, that he gave away 80% of his net worth to charity, it is more likely that the probate action merely addresses some of his assets left outside of non-probate assets.
Estate planning is all about stages of control – from determining who manages your estate, post-mortem (trustees and executors), to who gets what (beneficiaries), to when (staggered distributions in trust), to funding dreams and creating legacies (funding foundations, charitable donations), to preventing the government from deciding the best use of your money (estate and income taxes). Here, Boseman married his longtime girlfriend shortly before death – ensuring that she would presumptively inherit his assets as the surviving spouse with little planning. Strategically, it is also a good way to buy time to plan properly when fate intervenes to complete sophisticated planning.
Simply assigning all accounts, brokerage, checking, etc. as a joint owner with his spouse, and naming his spouse as beneficiary on any life insurance, annuities, and retirement accounts, would ensure that she inherits all these assets, likely far greater than the $1 million outright and outside of probate. Additionally, most states intestacy laws allocate all assets, not otherwise designated, to the surviving spouse so that accomplishes the short term goal of deferring decision-making and tax impact (if applicable). After inheriting the assets, Boseman’s wife can work with trusted financial advisors and tax attorneys to build and grow that inheritance in appropriate ways, including funding charitable causes that Boseman cared most about in a significantly more impactful manner.
For example, using a foundation or a donor advised fund can stretch the value and causes funded by a charitable donation significantly further and allow growth more than an outright donation. Incorporating a charitable lead trust (where the tax exempt charities receive annuities for a period with the remainder to noncharitable beneficiaries), can allow for noncharitable but important beneficiaries, such as loved ones to be financed adequately while also providing significant assets to the charities named in the trust. This has the impact of locking in the value for tax purposes and reducing tax liability due to a computation based on present value. Lead trusts are popular when interests rates are low. Alternatively, there are charitable remainder trusts which allocate the remainder to charity after payouts for a period to noncharitable beneficiaries. There are significant estate, gift, and income tax advantages of both.
For creatives, significant planning must be done to prevent misuse, duplication, dilution of creative works and, for public figures, rights of publicity (name, likeness, and image of the artist). Boseman was a creative. He loved to write, direct, and act, at the very least. His works carry value, licensing issues, intellectual property rights which may or may not be protected and even his “greater than life persona” carries value – a taxable value, as far the IRS is concerned. All of these require careful planning, incorporating usually tiered business entities, planned transfers, carefully worded trusts – none of which Boseman likely could have accomplished as thoroughly in the short time as his spouse can, as the beneficiary of all of these rights. If Boseman had a taxable estate (currently over $10 million (adjusted for inflation) for federal tax purposes), that tax is deferred on all assets passing to his spouse until her death thanks to the marital deduction. This gives Ledward time to plan, properly, carefully and adequately.
There are a multitude of other sophisticated strategies and reasons to incorporate sophisticated estate planning. This just touches the brim. The frenzy in the media makes it clear – without proper estate planning – everything left to probate is public and subject to speculation. Additionally, the lack of proper estate planning opens the gateway to preventable tax liabilities, and beneficiaries and charities not getting as much as one may have preferred.
Every person’s lifetime goals are unique, multifaceted, and we use sophisticated estate planning to implement strategies to meet them – both in life and beyond. Contact the Royal Law Firm PLLC today to learn more.