You would think that celebrities would have excellent estate planning attorneys to help get their affairs in order as quickly as they can. Think again. The rich and famous, much like everyone else, fail to plan properly or do not plan at all. Here are my top four estate planning blunders accompanied by a few celebrities’ stories that we can learn from:
Mistake # 1: Having no estate plan in place.
Mr. McNair did not plan on leaving this earth when he did and unfortunately, his mother, wife and five children suffered from the absence of an estate plan to provide for them after his death. McNair did not have a will, trust or any other estate planning documents executed. Thus, his estate fell into the hands of a probate judge to determine who would get what. His mother lost a 45-acre home he’d purchased for her and his estate owed Uncle Sam millions in taxes. His wife, left without enough liquid assets to pay his debts, had to petition the court to release some of the funds so she could pay the taxes. All of this could have been avoided with the proper estate plan. McNair, who was known for his charitable giving, certainly did not intend to leave his family in a bind. But at the age of 37, he did not think about planning ahead. His mistakes, albeit preventable, cost his family an inordinate amount of pain and suffering.
Anna Nicole Smith
Mistake #2: Not making provisions for future-born children in your will.
Born Vicki Lynn Hogan, Anna Nicole, had a very troubled life, especially after marrying Texan oil tycoon J. Howard Marshall. After Marshall’s death, a court battle ensued between Anna Nicole and Marshall’s children over his estate, and Anna retained a sizable portion. However, when she passed at the age of 39, her money did not pass with ease to her daughter Dannielynn. Anna Nicole set up a for the benefit of her son, Daniel Wayne Smith, but he predeceased her. Unfortunately, she did not amend the trust to make provision for her daughter or other heirs and her last will and testament did not help much. In fact, it made matters even more. Thus, the only living child of Anna Nicole needed a legal team before turning 1 year old to defend her interests in her mother’s death. With the proper estate planning, this expensive and stressful litigation could have been avoided.
Adam Yauch aka “MCA” of the Beastie Boys
Mistake #3: Writing or amending your will without an attorney. Huge Mistake.
The lesson to be learned here is not to make additions to your will without first checking in with your attorney. Yauch, who died of cancer at age 47, left a sizable estate behind (estimated at $6.4 million). Thus far, no one is bickering about the assets, however there was one line in the will that caused a problem. Apparently, in a hand-written statement, Yauch added the following to his will: “in no event may my image or name or any music or any artistic property created by me be used for advertising purposes.”
In adding that statement to his will, Yauch wanted to prevent others from profiting from his work posthumously. The issue here is that whoever owns the copyright to his music after he passes has ownership rights over the material and by law can do whatever they please. If Yauch retains an ownership interest then his heirs will receive a portion of the profits but they may not be able to stop the copyright owners from using the music. Upon his death, lawyers representing interested parties fought over that one line. At this time, it is unclear if that part of Yauch’s will is enforceable.
Mistake #4: Not Getting Good Legal Advice.
Most clients who ask me for estate planning advice often begin with the words, “I want a simple will.” After I go through a list of questions about their wishes, 99.9% of the time they have not thought through how they want their assets to be handled in the event that something happens. What if your spouse divorces you and re-marries? What if your children pre-decease you? These are questions that must be answered so that an estate plan can effectively carry out the wishes of the testator. Marilyn Monroe’s story makes me wonder whether she failed to ask these questions or whether her attorney was too star-stricken to properly advise her on what would happen to her assets if her beneficiary died.
The iconic Ms. Monroe died with no husband and no children. Who was the lucky beneficiary of her estate? Her acting coach, Lee Strasberg. He inherited three-fourths of what Ms. Monroe left behind and when he died, it went to this third wife who went on to make millions from Ms. Monroe’s estate by licensing its products to manufacturers like Mercedes-Benz and Coca-Cola. I doubt that Ms. Monroe wanted another woman, whom she did not know personally, to benefit from her fame. Had she set up a trust, she could have directed her assets elsewhere upon Strasberg’s death, preventing his wife (and her heirs) from getting rich off her fame. It appears as though Ms. Monroe was not thoroughly advised on what to do with her estate. But in this case, one woman’s failure to get good estate planning advice, was another woman’s fortune.
The take away: it is never too soon to consult an estate planning attorney.
For advice on estate planning that suits your particular needs, drop me a line at (202) 507-6313 or send me an email at firstname.lastname@example.org.