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In this edition of Ask General Counsel, Ann-Marie Murzin, who leads General Counsel PC’s Estate Planning Practice, discusses how to avoid celebrity estate planning mistakes. Make sure that you are not making the same mistakes as these celebrities!
Lesson #1: Do Nothing – Prince, Aretha Franklin, and Princess Diana
The biggest mistake a person can make with estate planning is not having a plan at all. Without a will or trust in place, a person’s assets are distributed according to state statute, regardless of what the individual would have wanted if they died, and if incapacitated, your medical treatment plan will be decided by the medical team, and your finances handled by your loved ones, but possibly only after court invention.
Each time it is in the news, it seems surprising that celebrities with such major legacies and sizable estates make this mistake. Consider Prince, Aretha Franklin and Princess Diana, who died without a plan in place. The takeaway here is that even though we are not public figures, their example proves that not having a plan is certain to create stress, cost money, and take time to resolve the resulting issues. Designing an estate plan takes about one hour in most cases. Contact us today to get started.
Lesson #2: Forget to Update Estate Plans – Heath Ledger
Planning does not end the moment an individual creates a will or trust. An estate plan should be revisited throughout a person’s lifetime to make sure that the plan still does what the individual wants and make changes as necessary.
An unfortunate example of this mistake involves Heath Ledger, who died with a will that wasn’t updated after the birth of his daughter. His estate went entirely to his parents and sister, and a legal battle resulted in the creation of a trust for his daughter. The lesson here is that dealing with the death of a loved one is hard enough without the added frustration and costs of battling with family over estate funds.
It’s recommended that estate plans be reviewed and updated if needed, every three years, but there are some common events that usually mean it’s time to update a plan, including getting married or divorced, having a child or grandchild, and the death of a loved one. It’s also prudent to create or review plans after buying a home or other asset, diagnosis of a medical condition, to plan for the potential care of a spouse when you no longer can do so, or any change in life circumstances.
You may also choose to update an estate plan after personal reflection that may impact your goals, what your legacy will be, and how you want to be remembered. Finally, as our laws change along with asset protection options, updating your estate plan to stay legally current is not only responsible, it will likely save you time and money while also ensuring your plan reflects your wishes and effectuates your current goals.
Lesson #3: Forget to Fund Your Trust – Michael Jackson and Paul Walker
Creating the trust document is not the final step in the estate planning process. After the trust is created, assets need to be transferred to the trust. If an individual indicates in his trust that his home should be distributed a certain way, but then fails to transfer ownership of the home to the trust, the trust will be distributed based on a will, if the deceased had a will, or by state intestacy law, if no will was created.
Michael Jackson made this blunder when he died with a will and trust but never funded his trust. Without a properly funded trust, his estate was administered through the probate process, which is public, costly, and more time-consuming.
Paul Walker also did not fund his trusts completely and utilized provisions in a pour-over will to fund his trust after he died. Not only is this mistake costly and time-consuming, probating a pour-over will is public, and the deceased loses one of the benefits of a trust: to keep personal matters private. Jeffrey Epstein, despite his wealth and trusted advisors, also committed this same mistake – but that feels more like karma.
Lesson #4: Insufficient Planning -James Gandolfini, aka Tony Soprano
While having a will is better than no estate plan at all, a simple will is not the best estate plan for everyone. Trusts allow for more strategic planning, which can result in tax savings and ultimately more funds to be distributed to beneficiaries.
James Gandolfini, a Sopranos actor, is the perfect example of this. He created a simple will, which resulted in a 55% estate tax (state and federal) and significantly fewer funds to be passed to loved ones. That tax bill could have been greatly reduced with proper tax planning. Also conflicts about artists’ unpublished creative work seems to be in the news frequently from Prince to author Harper Lee regarding “Go Set A Watchman,” the post-mortem sequel after “To Kill A Mockingbird.”
Lesson #5: Making Oral Promises – Marlon Brando
While Marlon Brando had an estate plan in place, it didn’t include oral promises he had made to his long-term housekeeper. His housekeeper claimed Brando verbally promised her his California home, but there was no mention of this in his estate plans. This resulted in two lawsuits and an eventual settlement, costing the estate money. Additionally, the long-term housekeeper did not receive the home — if Brando actually intended to leave her the residence, then his desired legacy was not completely fulfilled.
It’s important to make sure that an estate plan correctly and completely sets out your wishes for your estate, and ultimately your legacy.
Lesson #6: Hiding Your Will – Florence Griffith Joyner
While estate planning documents should be kept somewhere safe, it’s important that someone knows where to find them upon your passing. If a will can’t be found, it can’t be probated and administered. Olympian Florence Griffith Joyner (“Flo Jo”) had a will upon her passing, but no one could find it. Without the original will, it took years to close her estate.
It’s best to keep estate planning documents stored in a safe, secure location, such as a water and fireproof filing cabinet or safe. Some law firms will also agree to store your original, signed documents.
What you should do to avoid these celebrity mistakes
While the consequences for celebrity estates may be more extreme (i.e., legal troubles costing estates millions of dollars and years-long court battles), these mistakes can have significant costs (both financial and emotional) for any individual. Led by Ann-Marie Murzin, the estate planning attorneys at General Counsel, P.C. can guarantee that you’ll feel more confident about your future after you’ve made your estate plan or update your existing plan.
We would welcome the opportunity to help you navigate the estate planning process. Contact us today at email@example.com; via telephone at 703-991-7973, or schedule an appointment, and see how we can help you protect yourself and your loved ones!