Celebrities seem to live a charmed life, but for all the advice they can buy, they’re still not immune to estate planning issues and the consequences of ignorance and bad planning. Several recent celebrity estate issues in the news highlight how important it is to plan ahead and get professional advice when setting up your estate plans.
A recent Forbes article, titled "Lessons Celebrities Can Teach Retirees About Estate Planning," advises us to learn some lessons from famous stars who have passed recently—some with solid estate planning and some without.
Think Carefully About the People Involved in Your Trust. Robin Williams created irrevocable trusts for his children. Privacy is a big advantage to trusts, as they dare not be made public through probate. However, Williams' trust documents were made public after an original trustee died, and the co-trustee was required to petition a court to appoint a new one. Also, Williams’ management team claimed that the trusts were outdated and no longer part of his estate plan. The plans would have given each of his three children control over major assets at age 21. According to the original article, you should make sure you understand what happens to your trust when named individuals can no longer perform their functions. More structure could have been added to Robin's trusts to consider his children’s education and maintenance, but at the same time controlling the assets by way of a trustee.
Don’t Give the IRS Your Money. The late Philip Seymour Hoffman did not want his kids to end up being spoiled trust babies, so he made a straight bequest of his estate to their mother. But since he did not create trusts and he did not marry his longtime girlfriend (the mother of his children), his estate is now going through public probate without the tax benefits of the unlimited marital deduction. This means a huge tax bill for her. The original article recommends planning in advance and making sure your estate plan reflects your wishes. Keep your estate planning attorney in the loop and ask about changes in tax regulations and the laws in your state.
Make Sure Your Plans Keep Up With Your Life. Best-selling author Michael Crichton had writer's block when it came to his estate planning. Crichton died suddenly with his fifth wife expecting; however, he failed to update his will to provide for the new child. In addition, his will specifically excluded any future children from inheriting, which lead to a court battle between his wife (representing her son) and his adult daughter from a previous marriage. What was Crichton thinking? No seriously, what did he have in mind? Did he want to disinherit his young son? No one knows because it was not really clear based on his situation and his outdated estate planning documents. Forbes suggests that you review your estate and legal documents to make sure that they are accurate. Life events—divorce, marriage, new children, new business enterprises, retirement, moving to another state—all may impact your estate plans. If one of these or a similar life event occurs, review your financial and estate plans with a qualified estate planning attorney.
So, what's the big take-away from the estate planning of these stars? Start planning now for the unexpected and work with a qualified estate planning attorney to make your intentions clear and to create the estate plan that fits your situation.
Reference: Forbes (September 16, 2014) "Lessons Celebrities Can Teach Retirees About Estate Planning"