Thirteen Celebrity Estate Planning Lessons

Transcript of Podcast Episode 154

Hello this is Bill Rainaldi, with another edition of Security Mutual’s SML Planning Minute. In today’s episode, we will discuss thirteen celebrity estate planning lessons.

In a recent article for the website Wealthmanagement.com, author David Lenok took a look at one of our favorite subjects: celebrity estate planning gone wrong. He came up with a list of thirteen celebrities and the mistakes they made in their planning, all of which ended up costing their families dearly later on. Let’s take a look at some of the lessons learned.

1. James Gandolfini

When the star of the popular television series, Sopranos, died suddenly in 2013, he made one basic mistake: not taking full advantage of the marital exemption. The result was that his estate ended up paying taxes that could have been avoided.

For example, he decided to leave part of his estate directly to his children. An alternative would have been to leave the assets to his wife in trust for his children, thus taking full advantage of the marital exemption, while still insuring that the assets would eventually get into the children’s hands.

2. James Brown

The singer commonly referred to as the “Godfather of Soul,” apparently knew what he wanted to happen when he died in 2006, but the instructions he left behind caused great confusion to his heirs. It ended up taking over fifteen years to straighten things out between all the parties involved, and in the end, it cost millions in both legal fees and taxes. The lesson: be sure to make your intentions clear.

3. Michael Jackson

This one is simple. The very popular entertainer, dubbed the “King of Pop,” tried to do the right thing. He created a trust. But he never got around to funding it. Predictably, this led to years of public bickering among family members, and millions of dollars lost.

4. Howard Hughes

The billionaire business mogul died way back in 1976. His intentions were never clear because he never documented what he wanted properly, and a Nevada court eventually ruled that Hughes had died intestate. His estate was eventually split among 22 people and the Howard Hughes Medical Institute. Hughes may have intended to split his estate a certain way, but we’ll never know. It’s doubtful he would have been happy with what happened.

5. Michael Crichton

The Jurassic Park author died in 2008 at a time when his wife was pregnant. His unborn son’s needs were never addressed in his estate planning documents. His wife eventually sued to include their son, who was born shortly after Crichton’s death. This set off a public court battle with his daughter from a previous marriage. The lesson here is to remember the unborn children, and adjust your documents accordingly.

6. Doris Duke

The sole heiress of tobacco tycoon, James Buchanan Duke, made a big mistake before she died in 1992. She entrusted her wealth to her butler. It was reported that he instead lived a lavish lifestyle using money from a charitable foundation that Duke had set up. She would likely have been better off with an institutional trustee. Or perhaps she should have been more careful about who she trusted.

7. Casey Kasem

The last days of Casey Kasem, famed radio personality, were a tabloid editor’s dream: a whirlwind of conflict between blended families that included alleged medical abuse, negligence and kidnapping. The bottom line is that you need to be especially careful and thorough when blended families are involved.

8. Philip Seymour Hoffman

The Oscar winning actor died much too young at the age of 46, in 2014, from a drug overdose. He had tried his best to do the right thing. But without proper planning, chaos ensued. He left his estate to his girlfriend with whom they shared three young children.  He directed his assets to be used in certain ways for the benefit of his children, which would have been best served by the creation of a series of trusts.  As a result, the lack of planning caused a significant loss of wealth to estate taxes and insufficient financial protection of  the children.

9. Burt Reynolds and Aretha Franklin

This was a case of good planning vs. bad planning. The actor, Reynolds did it right; The famed singer, Franklin, often referred to as the “Queen of Soul, ” did not.

Although it’s been over three years since her death, no one is quite sure whether Franklin died intestate or not. Three separate documents have been found which could potentially be deemed her will, but that matter has yet to be settled. Either way, most of the details of her estate are going to become public information.

Reynolds, on the other hand, had a well-documented will. And part of the design was to make sure that very little information became public. This included his son Quinton, whom Reynolds said had been taken care of in a separate trust. The details of this remain private.

The bottom line: even if you’re famous, you can keep much of your estate away from the public eye. You just have to document and plan things properly.

10. Frank Sinatra Jr.

Without realizing it, Frank Sinatra Jr., famed singer and actor, left a mess behind when died. The problem stemmed with his wife—or some would say ex-wife—Cynthia, whom we married in 1998, and divorced in 2000. But they continued to live together, and Cynthia later claimed that they were living in a common law marriage. She filed for a second divorce—even though they hadn’t formally remarried— in 2013.

The two parties were still fighting it out at the time of Sinatra’s death in 2016. His attorney has stated that Sinatra should have been more careful. Thinking his decisions through a little bit more about his divorce could have made it more difficult for Cynthia to claim that they had been in a common law marriage.

11. Prince

Famed rock singer and musician, Prince is one of the more notable examples of a famous celebrity who died having done little or no planning. With the size of his estate, turmoil was inevitable. He had a sister and some half siblings, along with several other people who have since claimed to be his children. Without any documentation of his intent, and considering the amount of money involved, you can expect the saga to continue for years to come.

12. Robin Williams

Williams, the actor and comedian, is one of the few people on this list who actually had a thorough and well-documented estate plan. But conflict ensued nonetheless. His third wife, Susan Schneider, filed a petition asking for more money to pay her living expenses. And there were disputes with Williams’ three children from previous marriages, who were scheduled to receive the majority of his belongings. The issues were eventually ironed out through mediation about a year later. The bottom line is that even with the best estate plans, sometimes conflict is inevitable. Without the plan, the conflict could have been much worse.

13. Tom Petty

Rock singer, Tom Petty’s estate plan was thought to be complete and thorough, however it was only when he died that it became clear that it wasn’t.

At his death he had a wife and two daughters from a previous marriage. His hope was to have all three equally involved in any decisions that needed to be made. But those decisions can be especially challenging when intellectual property, the publishing rights to his music, is involved. Strangely enough, the stumbling point was the definition of the word “equally.” It took two years to figure that one out.

The lesson to be learned from Tom Petty: you need to spell things out very carefully.

What’s striking about this list is that so many of these mistakes are quite basic. While all of these people had access to some of the best attorneys in the estate planning field, in most cases they never followed up. And many of the mistakes here involve things that apply not just to the rich and famous, but to you and me as well. A little bit of common sense can go a long way.

Source:
https://www.wealthmanagement.com/estate-planning/thirteen-celebrity-estate-planninglessons/gallery

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