Famed Star Wars Director George Lucas recently sold his movie company to Disney for more than $4 billion. This move was part of an estate plan that allowed the filmmaker to use many of his assets while he is still alive to limit taxes that his heirs may have had to pay on his estate after his death. While Mr. Lucas’s estate is large, others in Texas can use a similar strategy for their estate planning.
By selling his movie company this year, Lucas may have saved on capital gains taxes. These taxes are currently set at 15 percent for high-income earners and zero for lower tax brackets for property owned for more than one year. In 2013, the capital gains tax is set to increase to 20 and 10 percent respectively. This savings alone may have preserved many thousands of dollars for the heirs of the Lucas estate.
Because none of his children wish to take over his business, Mr. Lucas may have decided to develop an exit strategy for selling his business. As a part of the estate planning process, he may have considered that he could help his heirs avoid the need to sell or divide the business after his death. This move not only saved tax dollars but also potential litigation as beneficiaries sought a fair share of the estate.
Estate planning in Texas may also include an exit strategy for a small business owner. In some cases this may be more complicated for a small business owner because of the need to continue the business until a later age than did Mr. Lucas. However, there are estate planning tools that can be used to create a good result for every individual situation. Developing an understanding of the available tools may be a benefit for those seeking to create a plan for their assets after their death.
Source: The Wall Street Journal, “George Lucas’s Jedi estate planning,” Quentin Fottrell, Nov. 1, 2012