The saying goes that anyone who does not learn from mistakes in the past is doomed to repeat them. In estate planning, if you do not learn from other’s mistakes, you are likely to repeat them. Mistakes in the estate planning of high profile celebrities is one very good way to learn the lessons of what not to do. Here are eight celebrity estates where the mistakes have been reported in the news over the years.
The actor James Gandolfini left only 20% of his estate to his wife, whereas if he had left more of his estate to his wife the estate tax on that gift would have been avoided in his estate. The result of not maximizing the tax savings in his estate was that 55% of his total estate went to pay estate taxes.
The singer James Brown left the copyrights to his music to an educational foundation, his tangible assets to his children, and $2 Million to educate his grandchildren. Due to the ambiguous language in his documents, his girl friend and her children sued and, 6 years later and after the payment of millions in estate taxes, his estate was finally settled.
Michael Jackson had a trust but he never fund the trust during his lifetime. This has lead to a long and costly battle in the California Probate Court over control of his estate.
Although Howard Hughes wished to give his $2.5 Billion fortune to go for medical research, no valid written will could be discovered at his death. His fortune was instead divided among his 22 cousins, though Hughes Aircraft Co. was gifted to the Hughes Medical Institute prior to his death and was not included in his estate.
The author Michael Crichton was survived by his pregnant second wife. His son was born after his death but since his will and trust did not anticipate a child being born after his death, his daughter from a previous marriage tried to exclude his son from his estate.
Doris Duke, heir to a tobacco fortune, left her $1.2 Billion fortune to her foundation at her death. Her butler was named as the one in charge of the foundation and the result was a series of law suits claiming mismanagement over the next four years, and millions in legal fees.
Casey Kasem’s wife and the children of his prior marriage fought over his end-of-life care and even the disposition of his body. the result was an embarrassing scene including kidnapping and theft of his corpse.
Prince and Aretha Franklin
Both music stars died without a will. This has lead to a very public, and in the case of Prince, a very contentious settlement of their estates.
So, even the most famous (and the most wealthy) people avoid a careful look at their estate plan, especially in the boarder context of taxes (Gandolfini), benefiting charity (Brown, Hughes), providing for family (Critchon), who to trust with managing your estate (Duke) and avoiding family disputes, especially in mixed marriages (Kasem).
If you have an estate plan in place, this is a good time to review your existing documents to make sure they still accomplish your wishes. Here are the questions you should think about:
· Does your will match your wealth transfer wishes?
· Are your assets titled correctly and have you set up the appropriate beneficiary designation forms?
· Have you established and funded all necessary trusts?
· Do you need and have necessary planning documents?
· Are your business interests adequately covered?
So consider these mistakes of celebrities when you are creating a comprehensive estate plan. It will bring you peace of mind today and will provide clarity and comfort for your family in the future.