Many people make estate planning mistakes and celebrities are no exception. Take Aretha Franklin, for example, who recently passed away without having a Last Will and Testament. Often times, these mistakes could have been easily avoided. Below, you will find 5 examples of celebrities with amazing estate planning mistakes and 2 celebrities that got it right.
Note: If you want to brush up on the basics of Georgia estate planning (Wills, Probate, Power of Attorney, Revocable Trusts, Irrevocable Trusts and Advanced Healthcare Directives) take a look at these free ebooks.
Heath Ledger
I get asked often when an estate plan should be updated. One of the times when an estate plan should be updated or at least reviewed is when there has been a major change in your life. For example, if you get married, move to another state, have a dramatic increase or decrease in your wealth, if you retire, etc. In other words, you should have your estate plan reviewed when there has been a change in your family circumstances.
Heath Ledger, an amazing actor who passed away when he was 28 years old, had a Last Will and Testament which makes him pretty extraordinary considering many Americans don't even have a basic estate plan. However, he failed to update his Will after the birth of his daughter. As a consequence, his entire estate was left to his parents and sister.
Lesson Learned: Estate Plans are not "set it and forget it" documents. When there has been a major change in your life, review your estate plan and make updates to ensure they still incorporate your wishes. After all, if your life changes, so may your estate plan.
Florence Griffith Joyner
I've written about Florence Griffith Joyner before and about how she, like Heath Ledger above, had a Last Will and Testament. Unfortunately, she did not take the steps to make her Will available to her family after she passed away. Her family couldn't find it !!
This is problematic in Georgia because the law presumes that you intended to revoke the Will if your family cannot find it after you pass away, even if they have a copy of the Will. Over the years, I've had several cases where families couldn't find their loved one's Will. It really adds months and lots of expense to the process in order to confirm the copy of the Will.
Imagine if she had made her Will available or if she had bypassed the Will altogether with a vehicle like a Revocable Living Trust. Perhaps her family wouldn't have been torn apart trying to convince the Court what her true wishes were.
Lesson Learned: If you take the time to create a Last Will and Testament, take the time to make sure your family knows where to find it !!
Prince
When Prince passed away in 2016, we shortly learned that he did not have an estate plan at all. This isn't unusual. Most Americans do not have even a basic estate plan. Dying without a Last Will and Testament is called dying "intestate."
If you pass away in Georgia without a Will, don't worry, the State of Georgia has one written for you. Not technically, but they have a designed set of laws and rules that will determine who gets your assets and it may not be necessarily who you want.
Lesson Learned: Not having a basic estate plan is an estate planning mistake that even celebrities make. Take the time to create an estate plan because, after all, it's your money.
Chief Justice Warren Burger
I recently met a gentleman who told me he had purchased a "Dummies" book at a local bookstore about Estate Planning and he felt he didn't need to work with an attorney at all. In life, there are many things you can do yourself, but it doesn't mean you should. It reminds me of the commercial where the doctor is on the telephone explaining how to perform a complicated surgery and on the other end of the phone is the guy sitting at the kitchen table with a butter knife who says, "Shouldn't you be doing this?"
Not only should you not perform complicated surgery upon yourself, you should consult with an experienced estate planning lawyer to prepare your estate planning documents. This is true even if you are considered America's top lawyer.
Take the case of former U.S. Supreme Court Chief Justice Warren Burger. Interestingly, Warren prepared and typed his will himself on his computer. Perhaps spellcheck wasn't in use then, because he misspelled the word "executor" in his will. Additionally, he failed to give his executors any powers in his will.
Estate planning lawyers who have reviewed his will indicate he could have saved taxes by the use of a more modern will. In reality, even though he was America's top jurist, he could have used a good lawyer.
Lesson Learned: Don't rely upon Do-It-Yourself websites or attempt to write your estate plan on your own. Consult with an experienced estate planning attorney who can prepare a well-drafted Estate Plan for you.
Philip Seymour Hoffman
Philip Seymour Hoffman was an amazing actor having won an Oscar for Best Actor in 2006. He had three children and he was determined not to let his children become "trust fund" kids. But, he had a huge misunderstanding as to what a Trust can accomplish.
Instead, he left his entire estate (approximately $35 million) to the mother of his three children. Unfortunately, he also left them with a massive estate tax bill which most likely could have been avoided had he used a Trust.
But, Trusts can be customized in many ways and he could have incorporated stipulations into a Trust so that the children's inheritance would have been doled out in certain circumstances to his children. As an example, he could have required the children to work in order to receive an inheritance.
Lesson Learned: Trusts can be customized in many ways and can offer peace of mind that your estate will go to who you want it to go to when you want it to get to them.
2 celebrities that got it right
David Bowie
David Bowie was an innovator in many ways. During a period of financial insecurity, he created what would be known as "Bowie Bonds." In essence, he sold asset-backed securities which netted him $55 million. His music portfolio were the assets which backed the securities. Although the Bowie Bonds weren't specifically part of his estate planning (he did want to provide for his family during their lives), they ultimately provided him with financial security and a sizeable estate to leave to his family.
Interestingly, since his passing, we've learned that his primary estate planning vehicle appears to be a Last Will and Testament. This is interesting because many details of his life became public through this vehicle, such as how much money he had along with where he wanted the money to go.
He indicated his estate was worth at least $100 million and that he wanted half of his estate to go to his current wife. Additionally, most of the remaining estate went to two of his children with a couple of specific gifts to certain people.
Many people these days prefer to keep watchful eyes out of their financial affairs. They prepare trusts which help keep those details private while at the same time keep their estate from going through a lengthy and sometimes costly probate process. While many people prefer trusts over wills, it seems David Bowie continued to be different beyond his death.
Burt Reynolds
Most people are aware of the celebrity of actor Burt Reynolds. He played in some iconic roles over his lifetime. When he passed away in 2018, many people were surprised by his estate plan. But, a closer look will reveal that he was very systematic in his approach to his plan.
The reason people were surprised by his estate plan was because, when his Last Will and Testament was filed with the Court, it specifically left his one and only son out of the estate. Instead, it left his niece in control of the estate. Many people would ask why he would intentionally omit his son from an inheritance. But, the Will revealed that he would leave an inheritance to his son in a Trust that he had established many years before and so there was no need to leave anything to him in the Will.
Unlike David Bowie, however, Burt Reynolds was able to keep his financial affairs and the inheritance he left for his son private and saved his son a lengthy and sometimes costly probate process. Because he lived in Florida, he may have been able to save on estate taxes as well with the Trust.
So, at first glance, it appeared that Burt Reynolds was a bit cold by leaving his son out of his Will. But, he had actually done him a favor by setting up his Trust in advance, which is very smart on his part.
Now that you've learned that celebrities are just like us and that they too can make estate planning mistakes, where do you go from here? I'd like to give you a few basic estate planning instruments that everyone should consider.
In general, a complete estate plan will contain the following documents:
- A Last Will and Testament
- A Trust
- Powers of Attorney
- Beneficiary Designations
- Medical Directives
The Last Will and Testament
A Last Will and Testament is a legal document where a person, also known as a testator or testatrix, states their desires and wishes as to the disposition of their property following their death. A Last Will and Testament is not designed to avoid the probate process. Instead, it is designed to guide you through it.
A Trust
A Trust is a legal document that gives a trustee instructions on how to handle certain assets upon your death rather than have the Courts determine the distribution of your assets. Any assets involved in a Trust will not go through the probate process upon your death. The person who creates the Trust, you, defines the terms of the Trust and instructions for the trustee on distributions to beneficiaries.
Powers of Attorney
The most common type of power of attorney in Georgia is the financial power of attorney. A financial power of attorney allows you to name one or more persons (your Agent) to handle your business and financial affairs just as you would if you were able. You can find a free copy of a financial power of attorney on our website by clicking here.
Unless you limit your Agent by making the power of attorney effective at a later date, your Agent will be able to handle your affairs at the same time you are handling your affairs. Work with an experienced estate planning attorney if you need a financial power of attorney.
Beneficiary Designations
Some financial instruments avoid the probate process if they have the proper beneficiary designations. For example, if you have a life insurance policy that names your spouse as the primary beneficiary, your spouse will receive the proceeds of that policy upon your death as long as the spouse is alive. The life insurance policy won't avoid the probate process if the spouse predeceased you and you never changed the beneficiary designation. So, it is very important to keep your beneficiary designations up-to-date.
Medical Directives
Like the financial power of attorney, there is a document which allows a person to handle your medical affairs if you ever become unable to do so yourself. In Georgia, this is called the Advance Directive for Health Care. You can find a free copy of an Advance Directive for Health Care on our website by clicking here. The Advance Directive allows your Agent to talk to the doctor on your behalf and access your medical records, among other things. It also allows you to make end-of-life decisions so that those decisions will not fall upon your loved ones if you were unable to tell the doctors what you would like to have happen if you were incapacitated. It's important to work with an experienced estate planning attorney if you need an Advance Directive for Health Care.
Where do you go from here?
I've educated many people on in the past, estate planning doesn't have to be complicated. Like a lot of things, the best thing is to simply get started. As you can see from the celebrity examples above, there are plenty of times in your life to consider estate planning principles. Don't make the same mistakes these celebrities made with their estate planning. Give us a call today. We're here to help !!
Mr. Farrell is the author of Estate Planning for the Modern Family: A Georgian's Guide to Wills, Trusts, and Powers of Attorney. You can learn about his book here and learn more about John here. Join the more than 1,500 people who subscribe to his Newsletter here. Feel free to send John a message here.
