Recently the Probate and Property Section of the American Bar Association published an article about celebrities and the problems the heirs experienced with their estate planning:
Jim Morrison who was the lead singer of the rock group The Doors, died at age of 27 with a two page simple Will. At that time, his estate was reasonably modest but eventually it became worth tens of millions of dollars. Because of the simplicity of the Will, there was a dispute between Morrison’s parents and his fiancé’s beneficial rights. Ultimately, the fiancé’s parents and Morrison’s parents agreed to divide the estate equally.
With a more sophisticated and relevant estate planning documents, the estate could have been distributed to the beneficiaries Morrison really wanted. Moreover, the distributions could have been protected by Trust.
Actor Philip Seymour Hoffman died leaving an estate of approximately $35 Million. Because of the insufficient planning that was done, Hoffman’s plan did not protect the rights of his surviving family members and they were not updated to keep up with changing family circumstances with respect to his after born children.
Heath Ledger who won an Oscar as the Batman villain, died from a prescription drug over dose that was ultimately labeled accidental. The purchase of life insurance within two years on Ledger’s death was in the contestability period during which the insurance company may review the insurance application for miss-statements. In Ledger’s case the insurance application may not have referenced the use of numerous prescription drugs. This was a major problem. He could have had an Irrevocable Life Insurance Trust set up that would have solved all of his problems. Moreover, when life insurance applications are completed, the applicant has to carefully understand the extent of the life insurance policy. An Irrevocable Life Insurance Trust would have been appropriate in this case.
David Bowie died at age 69 leaving an estate estimated to be as large as a $100 Million. He was a singer and song writer and a musician as well as an actor and record producer. He was a Citizen of the United Kingdom and a Resident of Manhattan. Unfortunately, there were major problems with his estate plan involving his second wife, the model and actress, Iman. Bowie had a child from a previous marriage and he and Iman had one child together. The estate plan was very confusing and the Trust needed to be modified to provide for keeping the balance for the children in Trust for their protection rather than outright distributions.
J. Howard Marshall II was a very affluent ninety year old who married the much younger Anna Nicole Smith. His wife, Anna was only 27 when Howard Marshall married her. He subsequently died within 13 months of marriage. Because of faulty planning, a dispute involving Anna Nicole Smith, his purported wife, and his son resulted in expensive litigation, negotiations, lawsuits and appeals in the Court system. Ultimately, the Supreme Court ruled the California Bankruptcy Court lacked the authority to inter judgment on a state law claim and in the end, Anna Nicol’s estate received nothing either from the son who had died or from Marshall’s estate.
Conclusion:
In each of the Estate Plans discussed above, some simple and straightforward revisions and updates could have made a substantial difference for the beneficiaries. It is interesting because the celebrities discussed had agents, managers and attorneys heavily involved in their careers. However, most of them did not have an ideal estate plan. Given the complexity of the laws, it is very important to update the estate planning documents and to make sure that the testator’s wishes are not only followed but protected.