Thanks to Danielle and Andrew at Trial and Heirs & Probate Lawyer Blog for this great article!
The 2014 Oscars are complete. Trial & Heirs looks back at past Oscar winners like Philip Seymour Hoffman, Elizabeth Taylor, Heath Ledger, Frank Sinatra, and Marlon Brando. Their estates illustrate important estate planning lessons that everyone can benefit from — even those who aren’t walking the red carpet at the Oscars.
1. Philip Seymour Hoffman Estate Planning Lesson: You Can Be Creative With Your Will or Trust
There were many mistakes and pitfalls with Philip Seymour Hoffman’s estate (including no estate tax planning and his failure to use a revocable living trust, as we discuss in our article). But, Hoffman — whose portrayal of Capote earned him the Best Actor Oscar in 2006 — didn’t do everything wrong.
He gets credit for a key component of estate planning that many people overlook: creativity. Estate planning is not meant to be “fill in the blank” or “one-size fits all.” You can use your will or trust to pass along your goals, values and moral beliefs. Most people think wills and trusts only pass along assets to the next generation, but they can do so much more.
Hoffman’s will highlights this. He included language in his will to express his strong desire that his son be raised in Manhattan, Chicago, or San Francisco, or at least visit one of those cities twice each year, to be exposed to the culture, arts and architecture that those cities offer. Hoffman could have taken it a step further, especially through a well-drafted trust, but we applaud the late actor for thinking outside the box.
2. Elizabeth Taylor Estate Planning Lesson: The Right Way To Use A Trust
The late, great actress was known for her many marriages, business savvy, and of course, her many successful movies. Elizabeth Taylor should also get kudos, unlike many celebrities, for doing proper estate planning. Despite early reports that Taylor’s family may fight over her estate, her estate has been just the opposite: peaceful. No probate filing, no copies of her will published on the web, and no court battles.
In fact, very little is publicly known about her estate. We do know that she created the Elizabeth Taylor Trust and funded it with her assets (including her publicity rights, to manage her name, likeness and image). We also know that her eighth and final husband, Larry Fortensky, inherited about $800,000, but that was only because he told the Daily Mail that in an interview. There are unverified reports that her Trust left most of her assets to her children, grandchildren, and charities (including AIDS research foundations), but the document itself has never been made public.
Why so much secrecy? Wills are public record, and have to be filed with the probate court, which means that everyone can read them. Properly-funded revocable living trusts, however, operate outside the probate system and remain private. Even better, well-drafted trusts are much less costly to administer, usually without the need for court oversight.
So Taylor’s estate should receive another award to place on the mantel next to her two Oscars (Best Actress in 1961 and again in 1967): Best Use of a Revocable Living Trust.
3. Heath Ledger Estate Planning Lesson: Wills And Trust Must Be Updated
Heath Ledger won his Oscar in 2009, for his amazing performance of The Joker in The Dark Knight. Sadly, his family had to accept his award for him, due to his sudden death in 2008. Specifically, his sister and parents accepted his Oscar for Best Supporting Actor.
Those same family members were the beneficiaries under Ledger’s will, dated three years before he died. The will left everything to Ledger’s parents and sisters, despite the fact that his daughter, Matilda Rose, was born after the will was written and before Ledger died. There were media reports that the family was preparing to go to court to fight over the estate — including public accusations by Ledger’s uncle against his father – until the family agreed everything would go to Matilda Rose.
Ledger also had a $10 million life insurance policy for his daughter, whom he had with actress Michelle Williams. This raises the question of whether Ledger wanted his other assets to go to his daughter, or if the life insurance money was all he wanted her to receive. Since he never updated his will, no one really knows.
Luckily for the Ledger family, the fight never reached court, and Matilda Rose benefited in the end. But Ledger should not have left it up to chance. It is critical for everyone to update their wills and trusts after important life events, such as the birth of a child, a new marriage, divorce, or even buying or selling a business.
4. Frank Sinatra Estate Planning Lesson: Plan Ahead For Trouble
While Ol’ Blue Eyes was of course best known for his crooning, he was a successful actor as well. He won his Oscar award for Best Supporting Actor, in the 1954 movie, From Here to Eternity. Sinatra had a wide range of talents, and estate planning was one of them.
Sinatra did what many people in second marriage (or third) situations fail to do — plan ahead to avoid a family fight. Probate court battles between adult children and a second spouse are far too common; they can often be avoided with well-drafted documents by an experienced estate planning attorney. Sinatra’s will, made in 1993, was very detailed — it was 21 pages long. It included a thorough “no contest clause” (also known to lawyers as an “in terrorem clause“). While these clauses are common-place today, Sinatra’s will was more unusual for its day. It prohibited 13 different legal actions, so that if any of his family members went to court, they would be completely disinherited.
Sinatra’s will worked. No one challenged his will, even though his children were reportedly unhappy with how much he left his widow, Barbara.
Too many people assume that their children and spouse will get along when they die. It’s always good to plan ahead, just in case, and help insure that your wishes are followed without family fighting.
5. Marlon Brando Estate Planning Lesson: Don’t Rely on Verbal Gifts
Brando never followed convention. He won his second Oscar for Best Actor in 1973, for The Godfather, but he rejected the award as a protest to the treatment of Native Americans by the film industry. Too bad he failed to follow the norms when it came to estate planning.
In part due to questions about his true intentions as expressed in his will and trust, Brando’s estate was involved in more than two dozens lawsuits by 2009 — five years after his death. There were multiple lawsuits involving claims of employees who used to work for Brando saying that he had promised them certain assets or interests, even though the verbally-made gifts were not reflected in his estate planning documents.
Many people make the common mistake of assuming their family members will honor their true wishes, as expressed verbally, even if the will and trust are not changed to include the new wishes. Many alleged that was the exact case with the Brando estate, leading to multiple legal challenges. In the end, those cases settled, leaving neither side happy with the outcome. Clearer estate planning documents could have avoided — or at least minimized — many of these fights, as we detail in our book, Trial & Heirs: Famous Fortune Fights!
We use the book to teach people how the estate planning lessons from celebrities can help everyone. The same rules apply to everyone; it’s only the dollar figures that differ. These are five great examples you can share with your loved ones, or your clients, to help encourage them to do the proper estate planning. Doing so may not win you any awards, but it should earn your loves ones or clients piece of mind.
Probate Lawyer Blog
Oscar Winners Teach Five Lessons on Estate Planning
March 7, 2014