Which Stars Made the Biggest Estate Planning Blunders?

Mistakes in the estate planning of high-profile celebrities are one very good way to learn the lessons of what not to do.

Forbes’ recent article entitled “Eight Lessons From Celebrity Estates” discussed some late celebrities who made some serious experienced estate planning blunders. Hopefully, we can learn from their errors.

James Gandolfini. The “Sopranos” actor left just 20% of his estate to his wife. If he’d left more of his estate to her, the estate tax on that gift would have been avoided in his estate. But the result of not maximizing the tax savings in his estate was that 55% of his total estate went to pay estate taxes.

James Brown. One of the hardest working men in show business left the copyrights to his music to an educational foundation, his tangible assets to his children and $2 million to educate his grandchildren. Because of ambiguous language in his estate planning documents, his girlfriend and her children sued and, years later and after the payment of millions in estate taxes, his estate was finally settled.

Michael Jackson. Jackson created a trust but never funded the trust during his lifetime. This has led to a long and costly battle in the California Probate Court over control of his estate.

Howard Hughes. Although he wanted to give his $2.5 billion fortune to medical research, there was no valid written will found at his death. His fortune was instead divided among 22 cousins. The Hughes Aircraft Co. was bequeathed to the Hughes Medical Institute before his death and wasn’t included in his estate.

Michael Crichton. The author was survived by his pregnant second wife, so his son was born after his death. However, because his will and trust didn’t address a child being born after his death, his daughter from a previous marriage tried to cut out the baby boy from his estate.

Doris Duke. The heir to a tobacco fortune left her $1.2 billion fortune to her foundation at her death. Her butler was designated as the one in charge of the foundation. This led to a number of lawsuits claiming mismanagement over the next four years, and millions in legal fees.

Casey Kasem. The famous DJ’s wife and the children of his prior marriage fought over his end-of-life care and even the disposition of his body. It was an embarrassing scene that included the kidnapping and theft of his corpse.

Prince and Aretha Franklin. Both music legends died without a will or intestate. This has led to a very public, and in the case of Prince, a very contentious and protracted settlement of their estates.

So, what did we learn? Even the most famous (and the richest) people fail to carefully plan and draft a complete estate plan. They make mistakes with tax savings (Gandolfini), charities (Brown and Hughes), providing for family (Crichton), whom to name as the manager of the estate (Duke) and failing to prevent family disputes, especially in mixed marriages (Kasem).

If you have an estate plan, be sure to review your existing documents to make certain that they still accomplish your wishes. Get the help of an experienced estate planning attorney.

Reference: Forbes (July 16, 2020) “Eight Lessons From Celebrity Estates”

A Non-Medical Check Up – For Your Estate Plan

An estate plan isn’t just for you—it’s for those you love. It should include a will and possibly, trusts, a power of attorney for financial affairs and a health care directive. As many as 60% of all Americans don’t have a will. However, the COVID-19 crisis has highlighted for everyone the need to have those documents. For those who have an estate plan, the need for a tune-up has become very clear, says the article “Time for a non-medical checkup? Review your will” from the Pittsburgh Post-Gazette.

With any significant change in your life, a review of your estate plan is in order. Keep in mind that none of your estate planning documents are written in stone. They should be changed when your life does. COVID-19 has also changed many of our lives. Let’s take a look at how.

Has anyone you named as a beneficiary died, or become estranged from you? Will everyone who is a beneficiary in your current estate plan still receive what you had wanted them to receive? Are there new people in your life, family members or otherwise, with whom you want to share your legacy?

The same applies to the person you selected as your executor. As you have aged over the years, so have they. Are they still alive? Are they still geographically available to serve as an executor? Do they still want to take on the responsibilities that come with this role? Family members or trusted friends move, marry, or make other changes in their lives that could cause you to change your mind about their role.

Over time, you may want to change your wishes for your children, or other beneficiaries. Maybe ten years ago you wanted to give everyone an equal share of an inheritance, but perhaps circumstances have changed. Maybe one child has had career success and is a high-income earner, while another child is working for a non-profit and barely getting by. Do you want to give them the same share?

Here’s another thought—if your children have become young adults (in the wink of an eye!), do you want them to receive a large inheritance when they are young adults, or would you want to have some control over when they inherit? Some people stagger inheritances through the use of trusts, and let their children receive significant funds, when they reach certain ages, accomplishments or milestones.

Have you or your children been divorced, since your estate plan was last reviewed? In that case, you really need to get that appointment with an estate planning attorney! Do you want your prior spouse to have the same inheritance you did when you were happily married? If your children are married to people you aren’t sure about, or if they are divorced, do you want to use estate planning to protect their inheritance? That is another function of estate planning.

Taking out your estate plan and reviewing it is always a good idea. There may be no need for any changes—or you may need to do a major overhaul. Either way, it is better to know what needs to be done and take care of it, especially during a times like the one we are experiencing right now.

Reference: Pittsburgh Post-Gazette (July 27, 2020) “Time for a non-medical checkup? Review your will”

What Happens When a Will Is Challenged?

What happens when estate planning doesn’t go according to plan? A last will and testament is a legally binding contract that determines who will get a person’s assets. However, according to the article “Can you prevent someone from challenging your will?” in the Augusta Free Press, it is possible for someone to bring a legal challenge.

Most will contests are centered around five key reasons:

The deceased had a more recent will.
The will was not signed voluntarily.
The deceased was incapacitated, when she signed the will.
The will was not signed in front of the right number of witnesses.
The will was signed under some kind of duress or mental impairment.

What is the best way to lessen the chances of someone challenging your will? Take certain steps when the will is created, including:

Be sure your will is created by an estate planning attorney. Just writing your wishes on a piece of paper and signing and dating the paper is not the way to go. Certain qualifications must be met, which they vary by state. In some states, one witness is enough for a will to be properly executed. In others, there must be two and they can’t be beneficiaries.

The will must state the names of the intended beneficiaries. If you want someone specific to be excluded, you’ll have to state their name and that you want them to be excluded. A will should also name a guardian, if your children are minors. It should also contain the name of an alternate executor, in case the primary executor predeceases you or cannot serve.

What about video wills? First, make a proper paper will. If you feel the need to be creative, make a video. In many states, a video will is not considered to be valid. A video can also become confusing, especially if what you say in the paper will is not exactly the same as what’s in the video. Discrepancies can lead to will contests.

Don’t count on those free templates. Downloading a form from a website seems like a simple solution, but some of the templates online are not up to date. They also might not reflect the laws in your state. If you own property, or your estate is complex, a downloaded form could create confusion and lead to family battles.

Tell your executor where your will is kept. If no one can find your will, people you may have wanted to exclude from your estate will have a better chance of succeeding in a will challenge. You should also tell your executor about any trusts, insurance policies and any assets that are not listed in the will.

Don’t expect that everything will go as you planned. Prepare for things to go sideways, to protect your loved ones. It is costly, time-consuming and stressful to bring an estate challenge, but the same is true on the receiving end. If you want your beneficiaries to receive the assets you intend for them, a good estate planning attorney is the right way to go.

Reference: Augusta Free Press (July 12, 2020) “Can you prevent someone from challenging your will?”

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Which Stars Made the Biggest Estate Planning Blunders?

A Non-Medical Check Up – For Your Estate Plan

What Happens When a Will Is Challenged?

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