6 Celebrity Estate Snafus and Successes and What They Teach us About Estate Planning
Estate Planning for business owners and families in Western Oklahoma.
No one wants to think about death, especially when it is their own. This scares many people out of proper estate planning. If there is anything these celebrity deaths have taught us, it’s that estate disbursement can get messy, unnecessarily expensive, and destroy family relationships.
1.- Princess Diana- The people’s princess had the good sense to do her estate planning at a young age, however instead of including specific instructions in her will, she opted to name her executors (her mother and sister) and then leave a separate “letter of wishes”. Although the sentiment of this letter is one of trust and hope, Diana asked that her belongings be split among her two sons and seventeen godchildren. Unfortunately, instead of obtaining an estimated 100,000 pounds of property, each godchild got only a trinket.
Lesson: Don’t rely on an executor's ethics to do your estate planning for you. Be very specific in your legal documents about what should go where and when. When you get older, give your most cherished belongings to whom you want before you die.
2.- Anna Nicole Smith- Although Ms. Smith and J. Howard Marshal was only married for one year, she claims he had said that she would receive one-half of his estate. Because Howard’s will had not been updated, the entirety of his fortune went to his son E. Pierce Marshall, who passed away not long after. After decades of fighting back and forth over the estate, she didn’t receive any of the Marshal estates.
Lesson: Draw up a prenuptial agreement.
3. Heath Ledger- Heath had the foresight to plan his estate, however, he did not update his will after his daughter was born. This meant that after he died unexpectedly in 2008, his fortune went to his parents and sister. Since then the family has awarded all of the 16.3 million dollar estates to his daughter Matilda.
Lesson: Although it all came out in the wash, this family's ethical reaction to his estate is the exception, not the rule. We are very happy that things worked out in the end for Matilda, but be sure to include all details and be very specific about who your estate should be inherited by and when.
4. Phillip Hoffman- Left an incomplete will when he passed at age 46. His will included his long-time partner and mother of his children, Marianna O'Donnell, and his oldest child Cooper Hoffman. The will did not mention any after-born children and although that would be assumed in Colorado law, in New York any children born after this Will would be considered excluded. Unfortunately, because he and his partner Marianna O'Donnell never married the estate will pass to her with a heavy 40% estate tax reducing her inherited amount from $35 million to $15 million. Had they chosen to wed, Marianne would’ve been able to inherit unlimited sums of money from Hoffman without estate tax.
Lesson: Consider the heavy price tag on estate tax when planning your estate. There are ways to get money where you want when you want and still avoid unnecessary tax. Also, include verbiage in your will that would include future children or better yet, update your will often. Always update it after large life changes including changes to income, new children, or a significant change in assets.
5. Tony Hsieh- Tony was the founder of Zappos and when he died at age 46 and since then his lack of estate planning has been a buzz in the financial planning world. Tony’s family filed in Nevada probate court that he had died without a will. In Nevada, that means his estate would pass to his parents. Whether that was his wish or intentions for his fortune, we will never know. The most difficult when valuing his assets is his ownership of numerous properties from various states that may have been purchased for friends and family. It was not clear whether these purchases were investments or gifts to loved ones. The only written information that was found were thousands of sticky notes left around his mansion that referenced certain business deals or financial commitments.
Lesson: Not having a plan is the worst plan. Each state has a different way they handle estates after death and if you don’t have a plan, they will pick their own. It will usually maximize taxes the state is owed after death. At the very least, get all of your accounts in order. Have one location where all assets, accounts, and financial commitments are located so that in the event of your death the courts aren’t tracking down your information for years, racking up legal fees, and creating a long drawn-out process for your family to endure.
In Summary:
Each family has different financial needs, dynamics, and plans. Keep all of these things in mind when considering your estate plan. We can’t stress enough how important it is to consult a professional when it comes to financial planning. We want to make sure your assets are going where you want them, when you want them, while avoiding all unnecessary tax.
