Authors: Attorney Daniel J. Schlichting & Law Clerk Elizabeth L. Spencer
Long after their deaths, celebrities often remain in the news because of disputes over their estate plans. Whether it is from a complete lack of planning or the result of proper planning, but never updating, the issues that arise in celebrity estate planning can affect anyone. Observing the disputes over celebrity estates can highlight mistakes to avoid in your own estate planning. Here are 7 mistakes to avoid.
Mistake #1: Not Having an Estate Plan
In 2016, it was estimated that only 44% of Americans have wills. One of the majority of Americans that did not have a will was the musician Prince. His death sparked a frantic search for a will directing assets worth more than $300 million. As a result of his lack of planning, up to half of his estate may be taken by the government as result of the estate tax and the rest may not go to his desired beneficiaries. A comprehensive estate plan would have allowed Prince to designate to whom his assets should go and would have allowed him to minimize the estate tax.
In Wisconsin, if a person passes without a will or any other former of estate planning, their estate shall pass in accordance with Chapter 852 of the Wisconsin Statutes. While Wisconsin does not have a state estate tax, an estate may be subject to the federal estate tax,. Thus, to have control over your estate you should consult an attorney in order to create the most advantageous plan.
Mistake #2: Not Updating Your Estate Plan
Both Whitney Houston and Philip Seymour Hoffman encountered the problem of having attorneys draft estate plans but never retuning to have them revised in accordance with their changing circumstances. Whitney Houston wisely made her will in 1993 prior to the birth of her daughter Bobbi Kristina and continued to make changes up until 2000. However, she never made any additional changes, even after she divorced Bobby Brown. Philip Seymour Hoffman drafted a will in 2004 when he had an estate valued at $500,000 and never revised it. At the time of his death he had an estate of over $35 million and more children.
Estate plans should be updated every few years, whenever your assets change, or you have a major life event that may affect the designations in the plan. An attorney will be able to help you determine if your previous plan is still the best way to achieve your planning goals and they will be able to update it if there are any changes in the applicable estate law.
Mistake #3: Not Using Trusts
Phillip Seymour Hoffman also avoided creating any trusts for his children as he allegedly believed that they would result in spoiled trust fund children. This misunderstanding about trusts also negatively affects his estate planning. Trusts are beneficial for numerous reasons including keeping the designations of your assets private, controlling the long term distribution of your assets, and avoiding estate tax.
Mistake #4: Not Using the Proper Estate Planning Documents
While he did some estate planning, James Gandolfini made the mistake of not using the proper documents that would have keep his estate private and avoid estate taxes. By relying primarily on a will, his bequests were public as wills are filed with the courts as public record.
Mistake #5: Only Making Oral Promises
After Marlon Brando’s death, his housekeeper alleged that Marlon had made an oral promise that she would inherit his home. Ultimately, this alleged promise going unfilled led to a lawsuit against the Brando estate. It is best practice to put all bequests in writing if you want them fulfilled. While accepted in some jurisdictions as valid, Wisconsin requires that a valid will must be in writing and will not recognize oral wills
Mistake #6: Not Planning for Unborn Children
Heath Ledger, for the most part, had a proper estate plan however, it allegedly failed in two aspects. First, the estate plan did not take into account any unborn children. Typically, an estate plan will include how to assets should be allocated if a child is born to the settlor after he has drafted his will. Second, Heath failed to update his will after the birth of his daughter. Your estate plan should be updated anytime you are expecting a child not only to adjust the beneficiaries but also to select guardians for the child.
Mistake #7: Not Keeping Your Will in a Secure Location
When Olympic Sprinter Florence Griffith Joyner died, she had a will but it could not be located. When the will could not be found, the courts considered her to be without one and it took several years to close her estate. A will should be kept in a secure location but one in which it can be found. In Wisconsin, a will may be filed with the court for safekeeping during your lifetime. Under Wisconsin Statute 856.03, upon learning of the death of a settlor of a will the court shall give notice to the personal representative named in the will so that it can be probated.
Both the famous and non-famous can experience the same challenges with their estate planning. However, many of these mistakes are completely avoidable if you consult with an attorney and then continue to regularly update your plan.
 Jeffrey Jones, Majority In U.S. Do Not Have a Will, Gallup, May 18, 2016, http://www.gallup.com/poll/191651/majority-not.aspx