The recent death of actor Philip Seymour Hoffman clearly demonstrated how failure to have an up-to-date estate plan, whether it is will-based or trust-based, can have a great impact on those left behind, both emotional and economic.
As we pointed out last week in our post Philip Seymour Hoffman’s Unexpected Death Raises Numerous Estate Issues, Hoffman’s 10 year old will left his entire estate to his long-time companion Marianne O’Donnell, who is the mother of his three children, two of whom hadn’t even been born when the will was first executed. Because it had not been updated in all that time, Hoffman’s true last wishes are left unclear, which can be emotionally stressful for the family.
Additionally, because he and O’Donnell were never married, and that Hoffman did not make any alternative plans to protect his assets through the establishment of a family trust, the $35 million estate could be hit with a $12 – $15 million tax bill.
Top Celebrity Estate Planning Mistakes
But Hoffman was not alone in his failure to adequately plan for the safekeeping of his estate. Numerous other celebrities did not have an adequate estate plan in place at the time of their death, leaving their loved ones to deal with a variety issues.
To illustrate the problem, we present five of the Top 10 Estate Planning Mistake Made by Celebrities, as compiled in the estate planning how-to book, Trial & Heirs: Famous Fortune Fights! …and what you can learn from celebrity errors, by Andrew Mayoras and Danielle Mayoras:
Mistake: Making Verbal Promises
Made by: Marlon Brando
Marlon Brando’s housekeeper said Brando made oral promises of a home and continued employment, which led to two separate lawsuits after Brando’s death.
Mistake: Failing to Finish What You Start
Made by: Michael Jackson
Michael Jackson created a trust, but never fully funded it, defeating a primary purpose of having a trust. This led to public family fights in probate court.
Mistake: Not Updating
Made by: Heath Ledger; Philip Seymour Hoffman
Neither Heath Ledger nor Philip Seymour Hoffman ever updated their wills after the birth of one or more of their children, leading to both economic and emotional chaos, not to mention family members fighting through the press, or worse, online through Twitter, Facebook, etc.
Mistake: Doing It Yourself
Made by: Justice Warren Burger
Physician, Heal Thyself! You would think that he, of all people, would know better, but Former Supreme Court Justice Warren Burger created his own will with just 176 words but he left out key provisions and his family paid the price.
And the #1 Celebrity Estate Planning Mistake:
Made by: Jimi Hendrix
If you do not plan your own estate while alive, you could end up like Jimi Hendrix and have someone that you barely knew controlling your legacy. Hendrix’s legacy was fought over in court more than 30 years after he died.
We’ve all fantasized about living like a celebrity at one time or another, but that doesn’t mean that we have to die like one. For more information about setting up an estate plan to protect your family and your assets after you’re gone, contact the Family Trust Institute. We can help you establish your goals and set up a comprehensive estate plan to achieve them.