Celebrities are just like us: they go shopping, have hobbies, and make estate planning mistakes that force their loved ones into protracted legal battles. Here are a few examples that illustrate the importance of comprehensive estate planning at every age. If you’d like to avoid mistakes such as these, read on!
Lessons from Anton Yelchin and Steve McNair: Don’t Wait
Both Anton Yelchin and Steve McNair died very young — Yelchin at only 27 and McNair at 36 — and both unexpectedly. They have something else in common, too: neither of them had done any estate planning. When Anton Yelchin died in June of 2016, he left no will. His estate, estimated at $1.4 million at the time, has been in probate since his death while his parents await their request for control of the estate. In the meantime, no one is able to manage his assets or make changes to his estate. In fact, his estate has continued to increase, likely due to royalties and investments. It may increase even further pending the result of a lawsuit against the manufacturer of the car that caused his death. His parents shouldn’t have to fight in court and wait more than a year to finalize their son’s affairs. Moreover, they won’t know if Anton Yelchin had planned to support any friends, charities, or causes, because he didn’t write them down.
The situation of Steve McNair is even more tragic and complicated. While Anton Yelchin was single and childless, McNair, an NFL quarterback with an estate over $19 million, was married with two kids. He also had two other children, both minors, from prior relationships, whose names were not listed as heirs on the original probate filing. In a statement, Mechelle McNair, Steve’s wife and mother of two of his kids, said she wasn’t sure the other children were his. In the meantime, Mechelle received the right to administer McNair’s estate, but the matter is far from settled. Because some of his assets are frozen, Mechelle had to file a year later for the right to withdraw $3.72 million just to pay taxes. Moreover, McNair’s multiple properties cannot be sold until his affairs are finalized, an unfortunate reality for his mother, who had been living in a multi-million dollar mansion Steve McNair bought for her ten years prior to his death. In 2011, his mother was asked to pay $3,000 a month in rent to cover the property taxes. Unable to do so, she had to find alternate housing, and that meant leaving the house her son obviously intended for her to have. Had McNair written his intentions down in a will, or better yet, developed a living trust to manage both his property and investments, his loved ones wouldn’t be stuck in protracted legal battles, fighting with each other over the assets, and spending money on lawyers fees. None of us know when we will breathe our last, and the biggest of all estate planning mistakes is not doing it!
Lessons from Heath Ledger and Whitney Houston: Update Your Plan
Sometimes celebrities do have a plan in place, but it’s not updated to reflect important changes in their lives. When Oscar nominated actor Health Ledger died in January of 2008 from accidental overdose, he left behind an old will. Signed in 2003, before he had any children, the will left his estate (estimated at that point at only $118,000) to his parents. At his death, however, he not only had amassed a fortune many times that number, but he had found love with actress Michelle Williams, with whom he had a child. Happily, even though his will did not specify his wishes, Heath Ledger’s parents announced later that year that they would give the entirety of his estate to his daughter, Matilda. Yet even this generous action may not have been exactly what Heath Ledger wanted, as it leaves Michelle Williams out, and does not provide the terms of Matilda’s inheritance. In any event, keeping an updated version of your estate plan will ensure your wishes are followed, and minimize the likelihood of it being contested.
When the great songstress Whitney Houston died in 2012, she had a will that she executed in 1993 right after the birth of her only child, Bobbi Kristina Brown. Under the terms of that will, Bobbi Kristina received 10% of her mother’s $20 million estate when she turned 21 and was due to receive the rest in subsequent installments. When kids are very young, parents have all sorts of hopes and dreams for their future, but they are really just that: hopes and dreams. Without knowing anything about her daughter’s ability to handle money, Whitney Houston gave her access to $2 million at a very young age. Unfortunately, evidence has since surfaced that Bobbi Kristina shared her mother’s dependency on prescription and recreational drugs. She died a few years later under nearly identical circumstances. We can’t know if better planning could have saved Bobbi Kristina, but the relatives who filed a petition to change the terms of the will clearly worried about the negative impact of receiving so much money outright. A responsible trustee with the discretion to withhold payments could at least have appropriated the money towards rehab or therapy, or placed restrictions on giving Bobbi Kristina the money until she developed the life skills to properly manage it. Of all estate planning mistakes, we want most to avoid ones that hurt our families.
Lessons from Paul Walker and Michael Jackson: Fund Your Trust
The Fast and the Furious actor Paul Walker had a robust estate plan consisting of a will and a trust to manage his nearly $25 million estate when he died in a car accident at age 40. Unfortunately, he neglected one crucial step of estate planning: he did not fully fund his trust. When he died, there should have been a relatively seamless transfer of assets to his heirs that took place privately through the provisions of his trust. But because so many assets were left outside the trust, his family had to open a probate, and the details became public knowledge. This is one of the most common estate planning mistakes, and it can be avoided if people are careful to check their plans every year to ensure that they are properly funded.
As we have mentioned in a previous blog post, the iconic pop star Michael Jackson left behind a will that apportioned his estate into a Family Trust to benefit his mother and children. However, because the trust was testamentary, like Paul Walker’s estate, the trust had to go through probate to receive management of the assets. This has allowed the public to know the details of Michael Jackson’s estate, and has also made it easier to contest. More than three lawsuits have already been filed, including one by Jackson’s mother. In addition, the exceptionally large size of the estate, which has been estimated at $600 million and has been increasing since his death, will continue to draw lawsuits from people who believe they should have a share. Many people don’t realize that having a will does not avoid probate. For those who are concerned about keeping their assets and the details of their plan private, it’s important not to repeat these estate planning mistakes.
Celebrities live their life in the limelight, under scrutiny even after death. The good news is, we can learn from their mistakes. Careful planning, done early and updated regularly, can go a long way towards ensuring your assets are passed on just the way you want. Give us a call, and let our professional team guide you through the process.
(Photo attribution:By Keith Allison from Baltimore, USA (RO9A0489) [CC BY-SA 2.0 (https://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons)