Steve "Air" McNair truly erred – how proper estate planning would have saved his family both money and grief now

As a quarterback in the National Football League, Steve McNair reportedly earned in excess of $75 million dollars over his career. Notwithstanding McNair's vast wealth and blended family, (as it has been reported that he had two children born out of wedlock,) McNair did not even have a basic will. Without a will in place, McNair died "intestate," an therefore, state laws will determine who inherits his estate upon his death. As such, the following preventable issues will now have to be addressed:

Laws of Intestacy: According to Tennessee intestacy laws, McNair's wife is only entitled to only one-third of the estate, and his children will be entitled to the remaining two-thirds. McNair may have intended that a greater percentage be provided to his spouse. As an aside, under the Commonwealth of Massachusetts intestacy laws, both McNair's spouse and the children would be entitled to fifty percent of the estate. 

Estate Taxes: McNair did not plan to shelter any portion of his estate from federal or state estate taxes. Consequently, the assets of his estate will ultimately be subject to both state and federal estate taxes, which will reduce the eventual distribution to his family. McNair failed to use the unlimited marital exemption and to yield the benefits of a Credit Shelter Trust.

Conservatorship: Since all of McNair's children are under the age of 18, each mother will have to petition the court to be appointed legal conservator of their child's inheritance.

No staggered distribution: When each child reaches the age of 18, their entire inheritance will be provided to them outright. It is often preferable to stagger the children's distribution ages to a later point in time to ensure that they have the requisite financial wherewithal to handle such a large sum of money.

Probate: It appears that McNair owned property in Mississippi. If so, McNair's family may have to probate his estate in both Tennessee and Mississippi, resulting in additional legal fees, costs and publicity.

In the event that Steve McNair had created an estate plan, he may have left more to his spouse, protected his children's inheritance well beyond the age of 18, avoided the public scrutiny of his affairs, and saved his loved ones momentous money in legal fees, estate taxes and other costs. 

By: Todd C. Ratner, Esq.

September 16, 2009 at 11:21 AM | Permalink

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