The entertainment world is still reeling from the unexpected passing of beloved Friends actor Matthew Perry in California. Perry’s estate was estimated to be valued at over $100 million at the time of his death. Known for his role on the hit show Friends the star's untimely death has opened a complex chapter for his estate. Matthew Perry was unmarried and had no children, leaving only his parents and siblings, which adds layers to his estate planning narrative.
Possible Scenarios for Perry’s Estate Management
With A Trust
Had the star established a trust, it would have outlined the distribution of his assets, including any residual royalties to whom he was entitled. Trusts can offer privacy, avoid probate, and ensure that assets are distributed according to the wishes of the trust Grantor. The trust could have specified allocations to family, friends, and/or charities, providing a clear roadmap for management of his wealth.
Without A Trust
In the absence of a trust or will, California’s intestacy laws come into play. Perry’s estate would likely go through a court process called probate, a public, lengthy, and expensive process. The star’s assets, including the residuals, would be distributed to Perry’s legal heirs - in this case, most likely his parents. This process can be complex, especially with such a high-value estate and substantial ongoing income. The threshold for probate in California is $184,500, so you do not have to be a multi-millionaire for your estate to go through a probate if your assets are not properly funded into a trust.
Charitable Giving
If Perry had left a portion of his estate to charity, it would not only reflect his philanthropic spirit but also significantly impact the estate’s tax liabilities. Charitable donations to qualified charities are deductible from the estate's value, leading to a reduction in estate taxes and maximizing the impact of the star's legacy.
Estate Taxes: A Major Consideration
Federal Estate Tax
For an estate of this magnitude, federal taxes are a significant concern. In 2023, estates valued over $12,920,000 are subject to federal estate taxes. Matthew Perry’s estate, valued at over $100 million, would face a substantial estate tax bill of roughly 40% of the estate's value exceeding the exemption limit.
California Estate Tax
California does not impose a state estate tax, but the federal tax implications are substantial enough to warrant planning ahead.
Impact of Advanced Estate Planning and Charitable Giving
Advanced estate planning, including the use of trusts and charitable giving, could significantly reduce the tax burden. By allocating a portion of the estate to charity, the taxable value of the estate would decrease, thereby lowering the estate tax. Additionally, certain types of irrevocable trusts can be structured to provide tax-efficient distributions to beneficiaries and allow for estate assets to grow outside of the estate unencumbered by estate taxes.
While we can only speculate the value of his estate and if he had a trust or not, the passing of Matthew Perry, with his considerable estate and potential ongoing income, underscores the importance of advanced estate planning. Whether through trusts, charitable giving, and/or other mechanisms, proper planning is crucial for high-net worth individuals to ensure their legacy is preserved and their wishes are fulfilled. This case serves as a poignant reminder of the complexities surrounding estate planning and the profound impact of thoughtful preparation.
If you, a friend, or family member need help establishing or restating an estate plan or with advanced estate planning, please reach out to our Intake Department at 760-448-2220 or at https://www.geigerlawoffice.com/contact.cfm. We have offices in San Diego (Carlsbad) and Orange Counties (Laguna Niguel), but we assist can families throughout California as well.
Brenda Geiger is the CEO and Managing Attorney of Geiger Law Office, P.C. and has been working as a trusts and estates attorney for over 20 years. She opened Geiger Law Office, P.C. in 2007 and has helped over 4,000 families create estate plans to protect their loved ones. Brenda has authored several books on Trusts, Elder Law and Business Law topics and is an active member of theh North County San Diego Bar Association and the North County Estate Planning Counsel. Brenda attended the University of San Diego for both undergrad and law school. In her spare time she enjoys spending time with her husband and two children traveling and watching soccer.
