Chadwick Boseman was a Hollywood actor, director, writer and producer who left us far too soon. He died in August 2020 at the age of 43. Boseman was best known for his portrayal of T’Challa (Black Panther) in several Marvel movies from 2016-2019, particularly Black Panther in 2018. Other major roles include portraying the first black player in Major League Baseball, Jackie Robinson, in 42, soul singer, James Brown, in Get On Up, and the first black U.S. Supreme Court Justice, Thurgood Marshall, in Marshall.
Despite his worldwide success and fame, Boseman’s “house” was not in order. According to documents filed with the Los Angeles Probate Court, he never got around to doing this one thing. A brilliant artist and incomparable human being who neglected a simple but important step . . . “Imagine That™”!
Three Frogs Sitting On A Lily Pad
There is a story about three frogs sitting on a lily pad. One of them decided to jump. How many are left on the lily pad? The correct answer is NOT two . . . it is three. He only decided to jump . . . but still had not done so.
Likewise, you may be reading this article and have important decisions vaguely floating in your head. You are like that frog on the lily pad . . . you have decided to do something, but have yet to actually jump.
The New York Times published an article on the day of Boseman’s death reporting he was first diagnosed with Stage 3 colon cancer in 2016 and it eventually progressed to Stage 4. Boseman silently battled colon cancer for four years but for whatever reason, he never got around to drafting estate planning documents to put his assets in order. Because there was no Will, the Probate Court now is required to deal with Boseman’s estate in a completely public manner – which will be costly to the estate and tie up assets potentially for years.
California law says that when someone dies without a Will (the technical term is “intestate”) and they are survived by a spouse and parents:
- Boseman’s wife, Simone, will receive all the community property and half of her husband’s separate property
- Boseman’s parents, Leroy and Carolyn, will receive the remaining half of their son’s separate property
Community property is generally defined as property acquired during marriage and separate property is property acquired before marriage. According to a Newsweek article published on the date of Boseman’s death, Boseman and Simone married sometime in 2020 but the date is uncertain. Unfortunately, much of her husband’s property will likely be deemed by the Probate Court as separate property – since they married sometime in 2020, and by August, Boseman was gone.
Also, future royalties and revenues deriving from Boseman’s name and likeness may require keeping the probate case open for an indefinite period of time. Not only will this be an expense that could have been avoided, but this adds needless delay for the distribution of this money as well.
Probate attorney fees are higher in California than most other states. In other states, lawyers charge by the hour or charge a fixed fee for the anticipated work. California, on the other hand, permits attorneys to charge what is called a “statutory fee.” It is based on the value of the assets that go through the probate process. For the first million of assets that go though probate, the attorney will receive $23,000. After that, the probate attorney receives 1% in statutory fees for the next $9 million in assets that go through probate.
Adding “insult to injury,” the statutory fees are based on the gross amount of the assets that go through probate. So, property with debt is included in calculating the attorney’s fee without first subtracting the mortgage or debt! So, a $1 million home with an $800,000 mortgage on it will pay the “statutory fee” of $23,000 despite only having a small amount of equity value.
Will or Living Trust
If Boseman had prepared a “Living Trust” document, his entire estate could have avoided the Probate Court process and been distributed according to the instructions in the estate documents.
Boseman could also have created trusts and other special estate planning tools to avoid the Probate Court such as:
- Delaware Statutory Trust: A Delaware Statutory Trust (DST) is a trust formed under the Delaware Statutory Trust Act of 1988. The IRS approved this structure as qualifying as a 1031 exchange option if it meets the requirements of Revenue Ruling 2004-86. Investors obtain a fractional interest in commercial real property by investing in a DST along with other investors
- Capital Gains Alternative Trust™: To use this technique, a Capital Gains Alternative Trust™ is set up and funded with the property prior to the sale going “hard.” The seller typically receives an income as either a fixed income-stream each year or as a percentage of the current value of the trust property. Upon the death of the final income beneficiary, whatever is left in the trust goes to a specified charity(ies), which is often the family’s own charitable giving fund
- The Private Pooled Income Fund: This strategy not only allows for the founder of the trust to receive income for the rest of their life(lives), but it also results in a massive income tax deduction which can be spread out for up to six tax years. It eliminates capital gains and federal estate taxes on sales of an asset in the trust
- Tax-Deferred Installment Sale: This is a powerful technique which for non-disclosure reasons cannot be discussed on our website or handout but must be outlined in person. Taxes are deferred for 30 years, and the seller receives (on average) 93½% of the net sales proceeds days after closing
- Private Placement Variable Life Insurance Contract: This is an insurance contract but most commonly purchased to “house” and grow investments inside the tax-free accumulation “wrapper” of the insurance contract. Premium payments and assets held may be cash, but could also be stocks, bonds, mutual funds, real estate, etc. Also, the mortality expenses are a fraction of the cost of traditional “retail” products. The money inside the contract grows without tax, and when the internal assets are sold, it creates no taxable event when set up in compliance with U.S. tax laws
Several of the above strategies can include a philanthropic outcome during life and also upon death. Boseman was clearly philanthropic and could have eliminated the Probate Court, but also reduced or eliminated any potential death taxes. As an adult, he volunteered with various cancer charities, including St. Jude’s Hospital, and made generous donations to the Boys and Girls Club of Harlem and the Jackie Robinson Foundation. In April 2020, Wikipedia reports Boseman personally donated $4.2 million in personal protective equipment to hospitals treating COVID-19 patients in predominantly black communities.
Given a choice of having his hard-earned income and assets go to his wife/parents or charities that he loved – or paying that money to attorneys and potentially a portion to State/Federal Governments – is there really any question on which he would have chosen? Had he created his own foundation or even a simple “Donor-Advised Fund,” his legacy of generosity could have continued for decades just using savings from not having to go through Probate Court.
Conclusion: Before You Actually Jump . . .
Don’t let your legacy and caring for your loved ones be compromised by a failure to properly plan for your eventual death. In preparing to “jump” off your lily pad, you need a clear plan to make sure you end up on the lily pad(s) that meet your objectives. That is where Wealth Legacy Group®, Inc. fits in. Let’s have a 15-20-minute complimentary conversation about your goals, situation & circumstances, such as:
- What is missing from your planning and/or estate documents thus far?
- What has changed in your personal or business circumstances that needs to be reflected in your documents or planning?
- Are your planning advisors working together as a team, or are they kept isolated from one another? Perhaps you have outgrown an advisor (or two?) on your planning team?
- Is there some additional creativity that is missing which could be brought to your situation?
Switching metaphors, having a clearly defined “road map” will crystalize goals, bring confidence, inspire action and the implementation of desired results. You can “leap like a black panther” – whether that is onto lily pads . . . or mountain tops! . . . “Imagine That™”!
Imagine That™! is a complimentary monthly newsletter provided by Wealth Legacy Group®, Inc. that addresses various topics of interest for high-net-worth and high-income business owners, professionals, executives and their families.
Sign Up To Receive Our Monthly Newsletters
Written by R. J. Kelly – June 2021
Image by Jill Wellington from Pixabay
Image by PDPics from Pixabay
Image by yourfrienddevin from Pixabay