THE PRICE OF PLANNING AHEAD INFLATION’S HIDDEN IMPACT ON YOUR ESTATE
Most of us notice inflation when we check out at the grocery store, not when we think about our estate plan. Prices for everyday items are creeping up, but those same price changes can also impact the value of what we own. When that happens, our estate plan may need a second look. Inflation means that money doesn’t stretch as far as it used to. A dollar today buys less than it did a few years ago. Homes, cars, and investments all fluctuate in value due to inflation. In the 1950s, the average home sold for about $7,400. Today, it’s well over $370,000. Wages have also increased, albeit at a slower pace. That gap explains why inflation matters when estate planning.
create new tax questions. Families sometimes find themselves paying more in taxes, only to watch those assets drop in value soon after.
The best way to handle this issue is to plan early and keep plans updated. We can start by reviewing our estate annually and comparing it to current tax limits. Adding beneficiary designations to accounts, such as life insurance or retirement funds, keeps those assets outside the taxable estate. Giving modest gifts to family or charities can reduce overall value while allowing us to see the results in our lifetimes. Inflation is constantly changing, and our plans should adapt to it accordingly. Reviewing what we’ve built every year helps ensure our loved ones receive what we intend, without unwelcome surprises when the time comes.
When the cost of goods and property rises, the total value of our estate rises with it. That sounds positive, but it can also push an estate closer to federal or state tax thresholds. A house valued at $1 million today might be worth $1.5 million in a few years, and that extra half-million could
Godfathers and Lost Gambles
Lessons From Movie Mobster Missteps Hollywood is home to some of the most jaw- dropping financial disasters imaginable … even for those in a fictitious mafia. Here are the unbelievable stories of how two people involved in the production of “The Godfather” Suddenly facing money woes at an age when most people are happily retired, he immediately took any film role he could get and even broke his longstanding refusal to do commercials.
Pacino eventually rebuilt his fortune to an estimated $40 million, while his accountant later served nearly 10 years in prison for orchestrating a Ponzi scheme. The lesson? Keep a close eye on the people who manage your affairs, as they have the power to ruin you. Or, in the words of Michael Corleone, “Keep your friends close but your enemies closer.” A Director’s Downward Spiral Pacino isn’t the only person involved in “The Godfather” series to get into serious financial trouble. The trilogy’s visionary director, Francis Ford Coppola, has filed for bankruptcy three times in his career. Many of his financial setbacks stem from his infamous insistence on self-financing his 1982 box-office bomb, “One From the Heart,” a romantically charged
saw their fortunes go completely awry. A Movie Mobster’s Money Meltdown The great Al Pacino has earned acclaim for his many film roles. Still, none has secured his fame more than his portrayal of second- generation mob boss Michael Corleone in “The Godfather” trilogy. You would assume playing an underworld mastermind would have taught the actor the value of steering clear of corrupt criminals, but he wasn’t so lucky with his choice of accountant. In 2011, he discovered that his trusted financial advisor had severely mismanaged his funds. This betrayal, along with Pacino’s admitted tendency to overspend (including on extravagant vacations and rent for a fancy Beverly Hills mansion), saw the 70-year-old actor’s fortune go from $50 million to virtually nothing.
musical that earned just over $500,000 on a $26 million budget. How did the creative mind behind “The Godfather” and “Apocalypse Now” fail so spectacularly? Well, if reviews at the time of the film’s release are any indication, the production was far from being embraced as readily as Coppola’s past masterpieces. The New York Times panned it as “unfunny, unjoyous, unsexy, and unromantic,” while famed critic Roger Ebert called it “an interesting production but not a good movie.” At a loss of more than $25 million, “One From the Heart” proves that even the most talented among us are capable of making colossal financial blunders now and then.
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