Fortune tellers are supposed to bring good luck to their clients. But in this case, it's the fortune teller that ended up with the fortune.
Hong Kong billionaire Nina Wang died this month, leaving her $4 billion estate to Chan Chun Chuen, who has been characterized as either a fortune teller or feng shui master, depending on who's writing the resume. Wang's surviving relatives, two sisters and a brother, are certain to point the impropriety of her vast estate going to Chan, who is more than 20 years her junior.
The looming fight over Nina Wang's estate has the potential to make the Anna Nicole saga look amazingly tame. But there are several lessons that people of more modest means can learn from this.
Communicate
The key to a good estate planning result is communication. At current count there are two wills for the late Ms. Wang, with the possibility of another one waiting in the wings. If you relocate to a different state or your marital status changes, you should replace your will. As your children get older you may need to update a will via a codicil. Your plans may have unintended consequences if you do not communicate your strategy.
Dividing an estate equally and dividing an estate fairly can be two radically different alternatives. Heirs may have different needs. It may make perfect financial sense to leave more money to your school teacher daughter than her orthodontist brother. Unless you communicate your rationale clearly, however, family discord may erupt.
Good estate planning results are difficult to attain. Ask any estate attorney and you will hear that heirs squabble over minutiae. Communication can make the estate planning process more seamless and less stressful.
It's not just taxes
Don't fall into the trap that estate planning means estate tax planning. Families of modest means -- particularly families that include children from previous marriages -- may have no estate tax liability, yet require a tremendous amount of planning. If the allowable estate tax exclusion amount increases, most estates will avoid tax liability. However, when there are illiquid assets, such as homes or business interests, there's an opportunity for planning. Also, grandparents can set an example via charitable bequests or they can encourage college education by bequests or gifts. That is "real" estate planning, even though it has zilch to do with estate taxes.
I'm sure that the lawyers will work out all details regarding Ms. Wang's estate. For you and your family, though, rest assured: there is a better way.
Fool contributor Buz Livingston, CFP, is a member of the Estate Planning Council of the Emerald Coast in Destin, FL. He believes that everyone will benefit from professional advice and he likes living by the beach.
