Q. I have been reading your newsletter for several years now. I remember, in the past, you did a series on celebrity estate planning mistakes and lessons that can be learned from them. I found it to be very helpful and interesting to read. Since then, have there been any new instances involving celebrity estate planning that we can read about and learn from?
A. Thank you for continuing to read and follow our newsletter.
With all of the money that celebrities have, you’d think they would be able to afford good estate planning advice. But too often after celebrities die, we learn that they made some serious mistakes that have triggered years of court battles or have cost their heirs millions of dollars.
As you mentioned, in the past, we did a series on this topic. Since then, several new celebrity estate planning mistakes have unfortunately come to light. Below are examples of mistakes that actors, athletes, and entertainers who have passed away made in their planning — and what we can learn from them:
1. Mistake: Not having a will (or any Estate Planning documents in place). The death of entertainer Prince wasn’t just shocking because he was only 57 years old. Many people were surprised the “Purple Rain” singer didn’t have a Will. Due to Prince’s lack of planning, a Minnesota judge was tasked with deciding how to distribute Prince’s estimated $300 million estate among six siblings. Other potential heirs have surfaced, too, including a federal inmate claiming to be Prince’s son.
Unfortunately, it’s estimated that 60 percent to 2/3 of adults in America don’t have a Last Will and Testament, so Prince isn’t alone. And, although having a Will is better than having nothing in place, it’s certainly not enough. If you have only a Will, your estate will pass through the painful, expensive process of probate. Probate court is public, expensive, time-consuming, and leaves loved ones more prone to fighting
2. Mistake: Inadvertently omitting a child. After actor Heath Ledger died in January 2008, reports surfaced that he had failed to update an old Will created before his daughter was born. As a result, Ledger’s entire $20 million estate went to his parents and three sisters. A Will should always have language that references any of your natural-born children, adopted children, or stepchildren, and any offspring you may have in the future. Fortunately, relatives revealed in late 2008 that all of Ledger’s money would go where he would have wanted — to daughter Matilda Ledger, whose mom is actress Michelle Williams.
In another example, Glen Campbell also left out children in his Will. Executed in September 2006, it excluded Kelli, William, and Wesley, his three children from his second marriage. The three were cut out of his estate and are not beneficiaries either under the Will or a related family trust. The court will hold a hearing next month regarding the contents of the Will.
According to new reports, “Partridge Family” star David Cassidy left his daughter, TV star Katie Cassidy, out of his Will despite a recent reconciliation between the estranged pair. If he had any intention of putting her back into the Will, then he should have updated it when their relationship improved.
3. Mistake: Keeping a Will’s location secret. Olympic gold medalist Florence Griffith Joyner had a Will when she died. The problem was that no one knew where “Flo Jo” kept it. It threw her relatives into an estate planning battle because they couldn’t find her original Will. And without the Will, it took four long years to close her probate estate.
4. Mistake: Failing to use trusts wisely. Academy Award–winner Philip Seymour Hoffman was determined not to let his children turn into spoiled “trust-fund kids,” so he chose not to create a trust. When he died in 2014, his entire $35 million estate went to the mother of his three children, Marianne O’Donnell. That might not have been so bad, except that Hoffman’s decision meant his beneficiaries also inherited a whopper of an estate tax bill. Hoffman erred in thinking that trusts would automatically create entitled or lazy trust-fund kids. Trusts can be customized, and Hoffman could have made specific stipulations about when, how, and under what circumstances his kids inherited money — including a provision that the children work.
5. Mistake: Failure to fund a trust. Superstar Michael Jackson’s death in June 2009 touched off a string of ongoing court battles over his estate, now worth $600 million. One of Jackson’s biggest estate planning missteps was failing to fund his trust. Absent a properly funded trust, Jackson’s beneficiaries have wound up numerous times in probate court, the estate is still open, and all things concerning it are subject to court approval.
6. Mistake: Making oral promises. Actor Marlon Brando had an estate plan for his $100 million fortune when he died in July 2004. Problem was, his written plan excluded certain oral promises he allegedly made to his long-term housekeeper, Angela Borlaza. She filed two lawsuits claiming she was illegally kicked out of Brando’s California home. The former maid said the house was a gift to her from Brando. The actor, though, never completed the paperwork to transfer the deed to give Borlaza legal ownership. In court, she sought $627,000 — the market value of the house — plus $2 million in punitive damages. The case settled for $125,000.
7. Mistake: Not finishing planning. “Sopranos” actor James Gandolfini was reportedly worth $70 million when he died in June 2013 of a heart attack in Rome. His Will provided for his widow, daughter, and two sisters. (His son from his first marriage was provided for in other ways.) But Gandolfini didn’t use proper tax planning. The result: The estate ended up paying federal and state estate taxes at a hefty rate of 55 percent. Gandolfini made a Will before leaving on vacation but did no planning beyond that. There are a lot of estate taxes that could have been avoided if he had done better estate planning, including creating a trust.
8. Mistake: Not updating a Will. Songstress Whitney Houston had a Will when she drowned in February 2012, but it was quite outdated. Drawn up a month before the 1993 birth of Houston’s only child, daughter Bobbi Kristina Brown, the Will was never revised — not even as the singer’s fortune climbed to $20 million. Bobbi Kristina was 18 when her mother died, and under the Will’s terms was to receive 10 percent of the estate — $2 million — when she turned 21 and the rest later. By not updating her will, Houston failed to consider whether her daughter was mature enough to handle millions of dollars. Bobbi Kristina got the $2 million but not the rest of her inheritance. She died in 2015, also as a result of drowning and drug intoxication.
In another instance, singer Barry White was separated but not divorced from his second wife at the time of his death. He never updated his estate planning documents when he got remarried. His ex-wife got everything, while White’s live-in girlfriend of several years got nothing.
9. Mistake: Not planning for taxes. Poor planning could force your heirs to sell valuable or sentimental items because they don’t have the liquid assets to pay the taxes. For instance, the family of Joe Robbie (founder of the Miami Dolphins) had to sell its stake in the Miami Dolphins and Joe Robbie Stadium to pay estate taxes.
10. Mistake: Not including personal property in your planning. Robin Williams’s family has engaged in a legal battle over the late actor’s film memorabilia, while Martin Luther King, Jr.’s children fought over his Bible and Nobel medal.
Estate Planning Is Important for Everyone
We here at the Farr Law Firm have strategies in place to help all types of people plan for themselves and their loved ones. (Whether or not you are rich and famous … and most of our clients are not!) With advance planning, each person can retain the assets it has taken a lifetime to accumulate and the peace of mind that their child(ren)’s needs will be adequately and properly addressed. If you or members of your family have not done Incapacity Planning or Estate Planning, or if a loved one is beginning to need more care than you can handle, please contact us as soon as possible to make an appointment for an initial consultation:
Fairfax Estate Planning: 703-691-1888
Fredericksburg Estate Planning: 540-479-1435
Rockville Estate Planning: 301-519-8041
DC Estate Planning: 202-587-2797
About Evan H Farr, CELA, CAP
