You would think celebrities, with all of their fame and fortune, have it all together when it comes to estate planning. Unfortunately, they seem to make of the same mistakes estate planning attorneys see everyday John and Jane Doe making.
This is the advice in a recent Forbes article, titled "Lessons Celebrities Can Teach Retirees About Estate Planning."
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 Also, there was a legal challenge that the trusts were outdated and no longer part of the Williams estate plan. The trusts 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 the Williams trusts to consider his children’s education and maintenance, but at the same time to control the assets by way of a trustee.
Don’t Give the IRS Your Money. The late Philip Seymour Hoffman did not want children to become trust babies, so he made a straight bequest of his estate to their mother. But since he did not create trusts and "fund" them, let alone 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 his estate. 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 must have had a case of 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 (or have language in the will automatically including later born children). In addition, his will specifically excluded any future children from inheriting (even worse), 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. Our practice is to send an estate review letter every two years (it arrives via USPS in October of odd-numbered years).
So, what's the big take-away from the estate planning of these stars? Start planning now for the unexpected and work with an experienced estate planning attorney to make your intentions clear and to create the estate plan that fits your situation. Then, make sure your review that estate plan whenever you experience a major life event or at least every two years.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri) and to download free tools to help you organize your estate, visit my estate planning website.
Reference: Forbes (September 16, 2014) "Lessons Celebrities Can Teach Retirees About Estate Planning"