Financial planning: The good, the bad and the uglyBlog added by Jim Katzaman on August 26, 2014
James Katzaman

Jim Katzaman

Glen Burnie, MD

Joined: February 10, 2014

For the most part, life insurance producers are not certified financial planners. Most of us are also not certified public accountants. Yet, all producers must have their clients’ best interests at heart. Otherwise they should not be in the business. If you don’t have all the answers, at least be the person who points your clients in the right direction through partnerships with CFPs and CPAs. Your clients and their loved ones will be in your debt. That holds true no matter how well off you think your clients are. Take the examples of three recent sudden celebrity deaths.

James Gandolfini died in June 2013 with an estimated $70 million estate. At first blush, this is a remarkable tribute to an actor who climbed to the top after decades of hard work. But one month after the “Sopranos” star’s sudden death in Italy, the details of his estate came out, and they weren’t pretty. His will was charitably called “a disaster” with perhaps more than $30 million of his estate possibly lost to taxes. Eighty percent was left to family members, making them subject to 55 percent in “death taxes” due to be paid nine months after his death.

See also: 10 celebrities who made unfortunate estate planning decisions

Gandolfini had a $7 million life insurance policy, which sounds totally inadequate for an estate worth 10 times as much. Bigger or more life insurance policies, a revocable trust and annuities could have — and should have — been part of Gandolfini’s financial planning.

Then came Philip Seymour Hoffman, who died in February 2014. Aside from the personal tragedy, an outdated will and lack of revocable trusts open much of his estimated $35 million estate to the tax man. As one analyst noted, Hoffman’s death “has shaken the entertainment world; the state of his $35 million estate should shake the world of personal finance.”

Then came the passing of Robin Williams in August 2014. Ironically, the manic comedian and actor apparently took his finances seriously. In contrast to Hoffman and Gandolfini, an analysis noted, “Williams took care of business when it came to setting up a solid estate plan.”

How big was Williams’ estate? The world — and the IRS — might never know, thanks to a revocable trust and other astute financial moves.

The common insurance producer can only hope to have even one wealthy celebrity for a client. However, there are plenty of people in all sorts of financial straits who need someone with common sense — and financial partnerships — to help them before it’s too late. Let Williams, Hoffman and Gandolfini — the good, the bad and the ugly of financial planning — be your guide.
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