Big Bite Out of the Apple?
Steve Jobs is dead.
The famous founder and CEO of Apple, one of the most successful companies in U.S. history, died on October 5 of this year after a long time battle with pancreatic cancer. At last count the fruit of Jobs’ labor totaled more than $7 billion including more than $4 billion in shares of Disney stock. With such tremendous wealth, many in the estate planning arena have pondered whether Jobs was as clever with his estate plan as the technology that made him one of the wealthiest people in the world.
The answer is probably yes. Reuters reported that in 2009 Jobs and his wife, Laurene, transferred various real estate to trusts. One reason for transferring real estate to a trust is to avoid probate. Probate is the process of getting assets out of a deceased person’s name. When a person dies with assets only in their name, the assets must go through a probate proceeding to get them out of the deceased person’s name. By transferring real estate, for example, to a living trust, probate is avoided because the asset is in the name of a trust which is still living (e.g. a living trust), even though the person has passed away.
Another lingering question about Steve Jobs’ estate is whether it is subject to the Federal Estate Tax. (For a detailed discussion of the estate tax see the article titled “Luckiest Guy Ever?”) At the current rate of 35% of everything over $5 million, the Federal government could potentially take a big bite out of the apple. Assuming he did nothing for his estate plan (and wasn’t married), his estate tax bill would come out to around $2.5 billion or in Apple-speak, 12.5 million new iphones! However, if Jobs’ creative genius in the area of technology is any indication of his estate plan, he probably put a plan in place that greatly reduced or entirely eliminated a tax liability. One way to do this is through charitable gift planning. Charitable gift planning is a means of reducing the size of one’s taxable estate through charitable giving.
Whether Jobs employed some of these techniques in his estate plan may never be known, especially if he did employ them. One of the many advantages of a trust is that it is a private document. Other than the filing of the deeds that transferred the real estate to the trusts, there are no public records of the trusts. Thus, the details of Jobs’ estate plan, such as who gets what and who was left in charge of his fortune, may never be known.
While the death of Steve Jobs marks the end of a life of innovation, it also serves as a reminder of the importance of proper estate planning. Jobs was only 56 when he died.