Celebrities have wealth and cadres of professional advisors that most of us do not. However, when it comes to making estate planning mistakes some celebrities are no different that the rest of us. Everyone’s estate is vulnerable to outdated documents, botched beneficiary designations and other mistakes that can tie up your assets up in court for years, allow taxes and legal fees to eat up your estate, and leave inheritances to people you did not intend.
Making sure your estate ends up with the right people in the right way is more complicated than just drawing up a will. Retirement accounts and life insurance policies, for example, have their own named beneficiaries and will automatically pass to the designated person(s), regardless of what is in your will or trust. A will is not enough to protect your estate from probate or taxes, which can be time-consuming and expensive. A trust may be a better tool, when used correctly, in concert with a will (commonly referred to as a pour-over will), advance medical directives, and financial powers of attorney. Additionally, your assets and accounts must be titled correctly, and all beneficiary designations must coordinate with your estate plan. You should always work with experienced estate planning counsel that takes the time to educate you to ensure your goals and objectives are achieved, and periodically review and update your plan with legal counsel as needed due to changes in personal circumstance, tax or other laws.
Consider these well-known celebrities whose families have paid the price for their estate planning mistakes. There is no time like now to review and update your estate plan!
Having No Estate Plan – Prince
Prince died in 2016 with no Will or Trust. If you die without a Will (known as dying “intestate”), state law controls who inherits from you. Even though your estate may not be worth more than $200 million like Prince’s, you do not want to let the legislature and a judge determine who will inherit your assets. Even if the court chooses the persons you otherwise would, the process will be much longer and expensive without a will or trust. In Prince’s case the estate will be distributed among his six siblings and half siblings. A federal inmate who claimed to be the singer’s son delayed the process. Three years after Prince’s death, his estate is still unsettled and millions have been spent in legal fees.
Do It Yourself Will – Aretha Franklin
When the Queen of Soul died in 2018, at age 76, the initial belief was that she left no will. However, family later purported to find three different hand-written wills (two from 2010 locked in a cabinet and a third from 2014 stuffed under her sofa cushions) in her Detroit- area home. Her four sons are now battling over the appointment of the personal representative of her estate, the validity of the wills, distribution of assets, and management of Franklin’s music catalog and likeness which could generate millions for generations to come and reported $80 million estate.
If you want your estate plan done right, you need legal advice. Creating your estate plan is not an appropriate DIY project!
Failing to Update Beneficiaries and/or Estate Plan – Barry White and Heath Ledger
When Barry White died in 2003, he was separated but not yet divorced from his second wife. Although he had a live-in girlfriend of several years and nine children they received nothing. The soon-to-be ex-wife inherited it all. This case points out the importance of needing to update your beneficiary designations and estate plan in the event of divorce/separation. This includes the important step of updating your financial and health care power of attorney to ensure that your soon-to-be ex won’t be the person making financial or medical decisions on your behalf if you are unable pending divorce. It is important to know that if you’re in the process of getting divorced, the law considers you to be legally married until a judge signs the decree ending your marriage. If you are going through divorce, you should meet with estate planning counsel to discuss your options for limiting your soon-to-be ex’s inheritance rights and later to make final updates upon final decree of dissolution of marriage.
When Heath Ledger died at age 28, his will left his entire estate to his parents and three sisters. The problem was that his will was written before his then two year old daughter’s birth, leaving his daughter Matilda and her mother nothing. Ledger’s family later gave all the money from the estate to Ledger’s daughter.
As a general rule, it is recommended to have an experienced estate planning attorney review your documents every 3-5 years as a matter of course. However, a life-changing event like the birth of children or change in marital status should always trigger a review and update to your estate-planning documents and beneficiaries designated on accounts and policies.
Call us today to schedule a complimentary consultation to review your estate plan: protect yourself and your family with proper planning.
-Stephanie A. Bivens, Esq., CELA