From 'Real House' to Big House
Real Housewives of New Jersey centerpiece—or piece of work, depending on your perspective—Teresa Giudice and her husband, Joe, in March pleaded guilty to charges of mail, wire, and bankruptcy fraud. In addition to prison terms, they were ordered to fork over $414,588 in restitution. The couple could owe millions more; the denial by a judge of their bankruptcy filing left them still liable for $13 million in debt, according to a court-appointed bankruptcy trustee.
Athletes Lose Financial Footing
In this year’s installment of professional athletes burning through a fortune, we have NHL defenseman Jack Johnson, with lifetime earnings of more than $18 million, citing $50,000 in assets against more than $10 million in debt when he filed for bankruptcy in October. His $5 million-per-season salary with the Columbus Blue Jackets is currently being garnished, and his future earnings are also at risk. A sad twist to the tale: The athlete claims his parents played a major role in depleting his fortune.
Johnson joins a way-too-long line of athletes running into bankruptcy that includes Mike Tyson, Lawrence Taylor, and Dorothy Hamill, to name just a few. In 2014, ex-NBAer Antoine Walker previewed his coming documentary, Gone in an Instant, which details how he burned through $110 million on his way to bankruptcy. One comeback story of note: NFL quarterback Michael Vick recently divulged he has repaid more than $15 million of the near $18 million of debt he carried into his 2008 bankruptcy.
The (Tax) Code Breakers
After a four-year audit of actor Chris Tucker’s books, the IRS in September struck a settlement with the costar of the "Rush Hour" movies. No details were announced, but the IRS did place a $2.5 million lien against Tucker as a "technical requirement" in order for the settlement to become official. Actress Vanessa Williams was also smacked with a tax lien for what the IRS claims is more than $300,000 in unpaid taxes from the 2011 tax year.
Home Court Disadvantage
Houston Rockets center Dwight Howard sold his Orlando, Fla., mansion for less than half the $7.78 million he shelled out to buy it in 2008 when he was a member of the Magic. The final sale price of $3.4 million was a steep discount to the $4.9 million list price. (Then again, the $4+ million loss works out to about two months of pay under his current mammoth contract.)
Michael Jordan (pictured) pulled his 56,000-square-foot compound—that is not a typo—off the market in early 2014, after nearly two years of trying to sell the place in Highland Park, outside Chicago. The original list price of $29 million in 2012 was dropped to $21 million, and when that failed to generate interest, Jordan resorted to a December 2013 auction with a reserve of $13 million. Still no takers. Within a week he relisted at $16 million (yes, above the auction reserve that wasn’t met a few months earlier). Still no takers, so the manse is off the market for now.
Joan Rivers and Robin Williams spared their loved ones any extra heartache by having their estate plans in fine shape before they died, as both had revocable living trusts. Philip Seymour Hoffman’s estate was not as ideally set up. For starters, he relied on a will rather than a trust; given that wills must go through probate, that has made his estate docs public. Hoffman left all his money to his partner, but because they were not married, she will not be able to claim the spousal exemption that allows all assets to pass to a surviving spouse without federal estate tax. It is estimated that tax bill alone could cost $12 million or so. Hoffman had also not updated his will since 2004, long before two of his three children were born. That could create some headaches as well. With some expert estate-planning advice, Hoffman could have used trusts to lower his heir’s tax bill and clearly lay out his wishes for his children.