Celebrity Estates Offer Cautionary Tales
There is little doubt that setting up an estate plan is a potentially arduous process, especially if you are a person of means, and there is a significant amount of money and property in your estate. You not only have to discuss difficult subjects with your estates and trusts lawyer and let them know who you want to have what, but you'll also have to make sure all bases are covered, so as to avoid complications after you're gone.
It's actually quite easy to foul up an estate plan. Even very high profile celebrities with a ton of money have managed to do that. Here is a list of famous people who died and left behind a complete mess of an estate plan, and are making the lives of their loved ones miserable as a result.
These are cautionary tales as to why you need to work with a certified estate planning attorney, and why you need to keep working with them while you're alive, to constantly review and modify your plan as circumstances change.
Philip Seymour Hoffman
There is no doubt that this Oscar-winning actor was enormously talented. It was also clear he didn't want his kids to grow up as entitled brats by providing them with a huge trust fund. What Hoffman did, however, was beyond foolish. He left his entire estate to his longtime girlfriend and the mother of his children, who was not a legal member of his family, since they were never married. That has resulted in a very public ongoing probate process, and which precludes even the possibility of avoiding massive estate taxes.
If Hoffman really wanted to make sure his children didn't become reliant on his enormous wealth, he should have set up trust funds for each of them, with specific instructions as to how and when they would receive the money. By leaving a specified amount for each of his children, who are legal family members, and creating the terms of its distribution, not only would Hoffman have avoided what he feared might happen, but he also could have avoided the massive amount of estate taxes his estate now faces.
He could have also saved a ton of headaches for his family. All he had to do was to marry his longtime girlfriend, or simply update his estate plan on a fairly regular basis. He should have consulted and listened to estate planning experts regarding the best way to handle his assets. When you have enough money to be subject to the estate tax, a simple will just won't work.
In his defense, the Emmy-winning actor who turned Tony Soprano into a larger-than-life figure does seem to have at least crafted an estate plan before he passed away. However, whether it was his stubbornness or someone else's incompetence, Gandolfini failed to plan in a way that would have helped his family avoid massive estate taxes. According to some sources, more than 80 percent of his estate was subject to federal and New York state estate taxes. And since the federal tax is 40 percent for assets over $5 million and New York's is between 5 and 16 percent for every million dollars in his accumulated estate, the total tax bill has been estimated to be $30 million, and had to be paid within nine months of his death.
Again, this is why you need a team of certified estate planning lawyers, and why you should listen to them. What happened in this case was incredibly easy to avoid with proper planning. That doesn't mean this falls on the experts. It's possible they advised him properly, and he just decided to ignore their advice. Such a thing is not unheard-of. Whoever is at fault, his loved ones have up to $30 million less than they could have.
The story of this beloved comedian serves as an excellent reason why creating an estate plan is only the first step in a lifelong process. You have to revisit, review and update your estate plan often. In Williams' case, he set up a trust for his three children, as a way to ensure their privacy, which is a good idea, especially for a high-profile celebrity. However. Unfortunately, one of the trust's co-trustees had died between the crafting of the trust and Williams' death, so the trust was made public. That means people could see how much of his money and property went to his children, and other information that Williams obviously intended to be private.
Again, if Williams had been reviewing his estate plan annually, he could have modified the trust and named other trustees, thus avoiding the embarrassing spectacle his children faced.