Estate planning is for everyone
The goal of estate planning is to leave what you have to whom you want to at the least possible cost in terms of administration and taxes. But, no one can successfully predict how long they will live; illness and accidents can happen at any age & when least expected. That's why estate planning is important no matter the age (or stage). Too many families are caught off-guard and found unprepared when an incapacity or death happens and proper estate plans are not in place.
Estate planning is also not just for the wealthy; it's important that proper estate planning & instructions be discussed and documented no matter the state of wealth. Indeed, estate planning can often mean more to families with modest wealth, because they can afford to lose the least.
I think there are profound lessons worth passing along from the estates of 4 very famous young stars who did not leave complete estate plans in place. Even more surprising given that these young stars would have had the resources available and most probably would have had lawyers in their employ to put estate plans in place. Whatever the reasons, it would be nice if others young or old, rich or not so rich could learn from their mistakes.
Phillip Seymour Hoffman (1967 - 2014)
A much loved, versatile & celebrated actor, director, and producer of film and theater who won a best actor Oscar for his role in "Capote" in 2006. He died of combined drug intoxication. He was 47 years young.
Estate Mistakes:
- His entire estate was left to his partner who was the mother of his 3 children,but he failed to create trusts for his children.
- Because his partner was not his wife, the estate did not transfer on a tax-free basis.
- By not setting up a revocable trust, his estate was subject to probate which caused further delays and costs and made his family financial situation, very public.
- Estimated cost of estate mistake: $15 Million of an estimated $35 Million estate
Amy Winehouse (1983 - 2011)
The controversial yet undeniably talented British singer and songwriter known for her deep vocals and eclectic musical taste, died of accidental alcohol poisoning . She was 27 years young.
Estate Mistakes
- She died "intestate" meaning that she did not leave a valid will.
- Her estate passed by law to her "natural heirs" being her divorced parents. Her ex-husband who she remained very close to until her death; received nothing.
- Her father was appointed as administrator and incurred considerable personal and financial burden in settling Amy's complicated estate which included 6 music companies. The resulting cost to settle bills, debts and taxes ate up the majority of the estate estimated at $7 Million.
Heath Ledger (1979 - 2008)
The brilliant Australian actor and director died of accidental overdose of prescription drugs. He had just finished filming his performance as the Joker in The Dark Knight for which he won many awards after his death including an Academy award. He was 28 years young.
Estate Mistakes:
- He did not update his will following the birth of his daughter, Matilda
- The beneficiaries in his will were his parents & 3 sisters with no mention of his daughter or his daughter's mother
- A filing of probate by his daughter's guardians in Australia sought part of the estate held in Australian trusts worth approximately $20 Million. Much publicity around family infighting ensued until Leger's father agreed to financially support his granddaughter
Paul Walker (1973 - 2013)
This young "heartthrob" was best known as the star of the Fast & Furious movies and tragically (and ironically) died in a high speed car accident that lead to a fiery car crash. He left behind a 15 year old daughter and a tangled mess of finances & questions. He was 40 years young.
Estate Mistakes:
- He established a revocable living trust for his 15 year old daughter many years earlier, but he was noted as the only trustee with no successor trustee named. This has lead to much debate between his own family and the mother of his daughter as to who will oversee the trust given that his daughter is a minor.
- He had not updated his will in 12 years, a period over which his net worth grew significantly. Given the fact that his will had not been updated, there were no provisions made for his girlfriend of 7 years, who he intended on marrying.
- While he established a revocable living trust for his daughter it was not funded fully during his lifetime so there has been considerable expense and publicity incurred that could have been avoided. It's a common mistake to set up a trust but not do the actual transfer
Estimated cost of estate mistake: $5 Million of an estimated $25 Million estate
Better and more complete estate planning would have saved the estates of these young stars, millions in estate taxes. Better financial organization would have saved the families additional grief that comes with tracking down details and settling final accounts. When better organization is in place; better and more complete planning can take place.
