Some may wonder why we at AgingOptions report fairly frequently on celebrities who pass away leaving chaos in their wake in the form of terrible estate planning. It’s not that we seek to gloat over the fall from grace of the rich and famous. We fully realize that the family members of these famous men and women are feeling real pain as they and their siblings, step-parents and others fight one embarrassing legal battle after another over a big pile of money – battles usually triggered by inadequate legal instructions regarding what to do with it.
High Costs of Terrible Estate Planning
No, our desire is to point out that each of us has an obligation to our loved ones (and also to ourselves) to prepare our estate, large or small, in such a way that the plan for our own care and the eventual disposition of our worldly goods are both ensured. It’s extremely ironic when a celebrity with plenty of money fails to take some basic steps while their health is good and their mind is sound to save their family some major pain and expense. As if to confirm the point, we offer this article that appeared late last month on the Kiplinger financial website. The title immediately caught our attention: it’s called “Six Estate Planning Mistakes Celebrities Made.” Some of these we knew about but others were new to us.
The real problem, Kiplinger reminds us, is not about famous people but about ordinary folks like most of us. “Outdated documents, beneficiary blunders and other estate-planning mistakes can tie your assets up in court for years,” the article warns, “[allowing] taxes and legal fees to eat up a chunk of your estate, and [giving] inheritances to people you didn’t have a good relationship with or hardly knew.” Without proper planning, the article goes on, each of us is vulnerable to making costly mistakes. “Anyone—from someone with a simple estate to someone with substantial net worth, numerous assets and a team of advisers at his or her disposal—can make planning missteps that have far-reaching consequences.”
Terrible Estate Planning, or No Planning at All?
For example, as Kiplinger puts is, there’s much more to estate planning than just drawing up a will. As we’ve reported before, retirement accounts have their own named beneficiaries, and those designations overrule whatever your will might say, yet many people fail to update the beneficiaries on these accounts even after a divorce, an adoption, or other life changes. “And,” says Kiplinger, “a will isn’t enough to protect your estate from court battles, taxes and probate—all of which can be time-consuming and expensive. But trusts, when used correctly, are a great tool to shield your assets from the probate process.”
Concerning celebrities who planned poorly, we wrote recently about Aretha Franklin who died without a will. But her oversight is sadly common in the world of celebrities. Kiplinger invites us to “consider these six well-known people who made estate-planning mistakes that punished intended heirs.”
- Celebrity: Prince. The Problem: Dying with no estate plan at all. Prince died in 2016 without a will, which means the state (Minnesota) divides the remaining assets, estimated at $200 million. “Two years after Prince’s death, bankers, lawyers and consultants have earned millions, and so far, heirs haven’t received anything.”
- Celebrity: Barry White. The Problem: Designating the wrong beneficiaries. White died in 2003 at which time he and his wife were separated but not yet divorced. As a result, “his live-in girlfriend of several years and nine children received nothing.” While there are limits on what changes someone can make to an estate during a divorce, it’s essential to follow a proper legal strategy so that those you love don’t get left out entirely.
- Celebrity: Heath Ledger. The Problem: Failing to add beneficiaries. Ledger died young in 2008, and his will left everything to his mother and sisters. But after the will was written, Ledger had a daughter with actress Michelle Williams, neither of whom received any of the estate. “Use life-changing events as triggers to review and update your estate-planning documents and the beneficiaries who are named on your financial accounts,” says Kiplinger. (Good news: Ledger’s family later gave the proceeds to the actor’s daughter as a goodwill gesture.)
- Celebrity: Florence Griffith-Joyner. The Problem: Keeping the whereabouts of your estate plans a secret. The famous Olympic sprinter known as FloJo was believed to have a will when she died at age 38 in 1998. “But,” says Kiplinger, “her family couldn’t locate the document. Years of legal battles followed” between Joyner’s husband and her mother. Your attorney should keep a copy of your will or trust on file, and you should also keep the original in a safe, accessible place, letting trusted loved ones know where.
- Celebrity: Marlon Brando. The Problem: Not putting promises in writing. When the famous actor died in 2004 his long-time housekeeper claimed that Brando had promised her his house when he died. “But Brando either never promised her the home or never took the time to put the promise in writing,” the article says. “She later sued Brando’s estate for the value of the home, plus $2 million in damages. The case settled in 2007 for $125,000.” The message is simple: put your wishes in writing.
- Celebrity: Michael Jackson. The Problem: Failing to fund a trust. This one is an eye-opener because of the amount of money involved. “Michael Jackson’s 2009 death set off a string of legal battles over his roughly $500 million estate,” wrote Kiplinger. “The biggest issue? Jackson had created a revocable living trust designed to transfer his wealth to his children and his mother when he passed. But he never funded the trust. Instead, his entire estate had been left outside the trust.” This triggered a lengthy and costly probate process and a string of legal challenges by creditors and family members. “A trust can be a valuable tool to streamline the process of transferring assets to your heirs while avoiding probate and keeping the details of your estate private,” the article concludes, “but if you don’t register your assets in the name of that trust, it’s absolutely worthless.”
Planning for Retirement
So much for celebrities who planned poorly – but what about the rest of us? We encourage you to take an important next step on the road to a secure retirement by attending a free LifePlanning Seminar with Rajiv Nagaich. These highly popular, information packed seminars will answer a great number of your questions, and we assure you that you’ll never look at retirement planning quite the same way again. There’s probably a seminar coming up in your city, so for a complete calendar visit our Live Events page and register today. It will be our pleasure to meet you at an AgingOptions LifePlanning Seminar.
(originally reported at www.kiplinger.com)