Safe 1

Top 10 Lessons from Celebrity Estate Planning Mistakes

LISTEN TO SAFE 1 TALK WITH THE MONEYWISE GUYS ON THIS TOPIC!

Just because celebrities have fame, money and success doesn’t necessarily mean they’re experts at estate planning. In fact, just like you and me, they’re probably not.

That’s why some celebrities have been involved in high profile estate planning errors which have cost their families and loved ones valuable time, money, and resources. Luckily, we can learn from these mistakes so we don’t repeat them in our own lives.

With this in mind, here are the top 10 lessons we can learn from celebrity estate planning mistakes.

10. Justice Warren Burger – Don’t Do It Yourself

• When former Supreme Court Justice Warren Burger died in 1985, he left behind an estate with an estimated value of $1.8 million.
• To distribute assets according to his wishes, Justice Burger drafted his own will which consisted of only 76 words, included numerous typos, and failed to give the executors of his estate the proper powers needed.
• Though he was an attorney, Justice Burger was not well-versed in estate planning laws and documents, resulting in his assets not being properly disbursed and the estate subjected to unnecessary taxes.
• Simply stated, don’t do it yourself!
• Estate planning documents are very important and shouldn’t be drafted by anyone but estate planning attorneys.
• Failure to understand the complex legal issues involved with estate planning can result in significant taxes, family infighting, or both.

9. Frank Zappa – Choose Your Fiduciaries Carefully

• Frank Zappa and his wife, Gail, were married for 26 years and had four children together – Moon, Dweezil, Ahmet and Diva.
• Prior to his death, Frank Zappa created the Zappa Family Trust which holds the rights to his music.
• When Frank passed away in 1993, Gail was named trustee of the Trust.
• While Gail was in charge of the Trust, their oldest son, Dweezil, toured using the name “Zappa Plays Zappa,” in which he would perform his father’s music.
• Upon her death in 2015, Gail’s role as trustee of the Zappa Family Trust was transferred to Ahmet and Diva.
• Upon assuming this role, both siblings blocked their older brother from using the “Zappa Plays Zappa” name and forced him to change it to “Dweezil Zappa Plays Frank Zappa.”
• Although this was probably not what their father would have wanted, the importance of choosing the proper fiduciaries of an estate plan cannot be underestimated.

8. Anna Nicole Smith & J. Howard Marshall – Plan for a Disinheritance

• At the time of their much-publicized marriage, supermodel Anna Nicole Smith was 26 and billionaire Texas oil tycoon J. Howard Marshall was 89.
• Unfortunately, their perfect match did not last long as, amazingly, J. Howard Marshall passed away just fourteen months into their marriage.
• To poor Anna Nicole’s surprise, she was not named in his will forcing her to team up with his disinherited son to sue for what she believed rightly belonged to her.
• You go girl!
• Although the case was litigated for over 20 years and went all the way to the Supreme Court, most interested parties died during the duration of the case.
• In the end, Anna Nicole did not inherit a dime of her beloved husband’s money.
• As if!!!!
• Remember, anytime a spouse or child is disinherited it increases the likelihood of a will or testamentary being challenged.
• As such, it is imperative clear language be placed in any will or estate plan to prevent anyone from contesting the wishes of those passing wealth to his or her heirs.

7. Casey Kasem – Plan for Incapacity

• Everyone loved Casey Kasem as the host of “America’s Top 40,” with many growing up listening to his voice on the radio and television.
• During his life, Casey was married twice.
• The first marriage lasted roughly seven years and produced three children.
• One year after his divorce, Casey married a second time resulting in one child and a marriage of 34 years.
• In 2007, however, Casey was diagnosed with dementia which eventually took his life in 2014.
• His illness and death resulted in one of the most bitter feuds in celebrity history between the children of his first marriage and second wife, including lawsuits claiming elder abuse, wrongful death, as well as dueling healthcare powers of attorney.
• In the end, all was settled but not before big dollars were spent!
• What can be learned from Casey Casem’s case is that every individual over the age of 18 should have a power or attorney in place.
• Absent these documents, a guardianship proceeding will be necessary.

6. James Gandolfini – Plan for Foreign Property and Know the Local Laws

• Upon his untimely and unexpected death in 2013, James Gandolfini left instructions for his property in Italy to be given to his children.
• Italian inheritance law, however, dictates children to automatically receive 50% of a property with the spouse obtaining 25%.
• In other words, James Gandolfini only had the right to give away the remaining 25% of his property.
• Obviously, this is something which his lawyers should have known or researched.
• As it stands now, the Italian property will be held in a trust until both children reach the age of 25 at which time they will own on a 50/50 basis.
• The lesson to be learned here is to be sure to consult with an attorney in the country where assets, such as property, are held.
• Differences in inheritance and succession laws between countries can lead to misunderstandings, friction, and lawsuits from heirs, which can be avoided by using knowledgeable local counsel.

5. Phillip Seymour Hoffman – Plan for Taxes

• In 2004, Phillip Seymour Hoffman created a will which included both his partner and, at the time, their only child.
• Unfortunately, between the time of the will being created in 2004 and his death in 2014, Phillip Seymour Hoffman and his partner, whom he never married, had two more children who were never added to the estate plan.
• Thus, upon his passing the overwhelming majority of Phillip’s $35 million estate was left to his partner and subject to estate tax.
• As such, she ended up paying millions dollars in taxes that could not be avoided and, later, had to reconcile affairs with the children not included.
• For obvious reasons, it is imperative to not only have an estate plan reviewed on a periodic basis to account for life changes – such births, deaths, and partner/spousal changes – but to do so in a manner that also takes tax considerations into account.

4. Robin Williams – Be Clear with Tangible Personal Property (TPP)

• To his credit, Robin Williams conducted extensive estate planning prior to his passing, including a prenuptial agreement as well as various trusts to benefit his third wife and children.
• Included in Robin Williams’ estate plan was the specification that his tangible personal property (TPP) be left to his children.
• Unfortunately, after his death, Robin’s wife disputed this in court challenging what could be “reasonably included” under the definition of TPP.
• Since Robin’s estate plan was not specific to the properties in question, it was taken to probate court where, eventually, his TPP was awarded to his children.
• Nonetheless, to avoid such a litigation and drama it is important to be specific as possible when defining properties in an estate plan.

3. Heath Ledger – Update your Documents

• Similar to Phillip Seymour Hoffman’s estate issues, Heath Ledger left behind an outdated will which did not account for a child.
• Indeed, between the time in which Ledger created his will in 2003 and his death in 2008, he developed a romantic relationship which resulted in the birth of his daughter.
• Unfortunately, Ledger’s will accounted for neither one of them and, instead, his estate was left to his parents and siblings.
• Fortunately, for Ledger’s daughter the family members disclaimed their interests in the estate so she could inherit everything via intestacy law.
• Once again, however, the importance of having an estate plan reviewed on a periodic basis to account for births, deaths, marriage, divorce, etc. cannot be underestimated.
• In other words, update your plan to make sure your wishes are followed.

2. Michael Jackson – Fund Your Trust

• What’s important to understand is once you have created a trust, it’s equally important to fund it.
• That is, be sure to place the assets named in your trust in the name of the trust.
• In the case of Michael Jackson, he did, indeed, have an estate plan with a revocable trust set up.
• The problem is, he never funded the trust by retitling his assets.
• As a result, the assets remained under his name and upon his death entered into probate resulting in both delays of distribution and unnecessary expenses.
• Simply stated, not funding a trust defeats the purpose of having one.
• So, fund your trust!

1. Prince – Have Estate Planning Documents

• It may be hard to believe, but Prince passed away without a will, trust, or anything to properly disburse his assets to his heirs.
• As a result, Prince’s substantial net worth valued between $200 and $300 million entered into probate with the state’s intestacy laws to determine who would inherit his fortune.
• Although it’s highly unlikely Prince would have wanted his assets going to his siblings, under Minnesota law they are and were considered his heirs.
• And after six years in the court system, during which time two of his siblings died, Prince’s assets valued at $156 million were disbursed.
• Essentially, with proper estate planning Prince could have avoided paying millions of dollars in taxes and years’ worth of delays in the court system.

Don’t let this be you! While we may admire celebrities for various reasons, the examples above clearly show how not to mimic what some of them have done when it comes to preparing to pass on your wealth.

Remember, when the time comes for you to review your assets and determine how they will be disbursed upon your death, be sure to do so with the assistance of both a financial planner and estate planning attorney. Oh, and by the way, that time is now!

Source: https://www.haleskemp.com/the-top-10-lessons-from-celebrity-estate-planning-mistakes/