Lessons From Celebrity Estate Planning Fails
Celebrities—they’re just like us! That’s certainly true in some ways, if not all (most of us can’t afford to drop a million dollars on hairstyling or a single comic book). Sadly, one of the things many of the rich and famous have in common with the rest of us is making estate planning mistakes.
Celebrity estate planning fails get lots of attention because the people involved were in the public eye. But just because your estate planning missteps aren’t splashed across the cover of a tabloid doesn’t mean they’ll be any less devastating for your family. Let’s take a look at some celebrity estate mistakes and extract some lessons about what to do—and what not to do—when making an estate plan.
Not Making an Estate Plan (Prince)
The entertainer Prince, born Prince Rogers Nelson, may not have expected to die at the relatively young age of 57. Unfortunately, when he did, he left behind no will or other plan to distribute his approximately $156 million dollar estate. While the court in his home state of Minnesota contemplated how to divide Prince’s estate among his six siblings under state intestacy laws, other potential heirs made claims against the estate. One of them was a federal inmate claiming to be his son.
Prince’s estate was finally settled after six long years, but millions in dollars were paid in IRS penalties and in fees to a court-appointed trust company, assigned by the court to manage the estate while litigation was pending. For a small fraction of that amount, Prince could have had an estate planning attorney create a will and trusts that would have saved his family six years, nearly ten million dollars, and untold stress.
Sadly, Prince wasn’t alone in failing to make a will; close to two-thirds of American adults don’t have an estate plan.
Not Considering Blended Family Dynamics (Tom Petty)
As Tom Petty famously sang, “The waiting is the hardest part.” No doubt that was true for his widow and children as they waited for a resolution of their dispute over control of his estate. Petty acted wisely in creating an estate plan that included a trust. Where he failed was in clearly communicating the terms of the trust. While he made his second wife the sole trustee of the trust, the trust also gave his two daughters from a previous marriage “equal participation” in decisions about his music catalog. This ambiguity led to a court battle that lasted over a year.
Estate litigation doesn’t only happen in blended families, but it tends to be more common, as children from a first marriage may perceive a stepparent as a threat to their inheritance (and vice versa). Whether or not you have a blended family, make sure the terms of your estate plan are clear and unambiguous—and communicate your intentions to your family members before your death if possible, so they don’t have to fight about them afterward. And if you do have a blended family, consider having a prenuptial agreement in your estate plan.
Making Verbal Promises (Marlon Brando)
When Marlon Brando died in 2004, his estate was worth over $100 million dollars. He made an estate plan, but that plan failed to include a generous promise he allegedly made to Angela Borlaza, his longtime housekeeper.
Borlaza claimed that Brando had orally promised to give her his California home, and filed two lawsuits alleging that she was unlawfully removed from the home. While Brando may indeed have intended to reward Borlaza for her service with the home, he never deeded the property to her or made the gift part of his estate plan. In the end, the case settled for $125,000—much less than the value of the house.
The lesson here is not to make promises (or words that can be interpreted as promises) without putting them in writing in a will, trust, or other binding legal document. It happens more often than you might think, and it’s costly not only in financial terms, but in terms of relationships between disappointed family members. Another way to avoid probate litigation over your estate is to include a no-contest clause in your will.
Failing to Fund a Trust (Michael Jackson)
When pop superstar Michael Jackson died in 2009, he had a trust as part of his estate plan—but he failed to fund the trust. Unlike a will, which is effective to distribute the property described in it as soon as it is executed, a trust needs to have property placed in it. If you fail to title assets in the name of the trust or otherwise transfer assets to the trust’s ownership, your trust isn’t worth the paper it’s written on.
Do-It-Yourself Estate Planning (Aretha Franklin)
It boggles the mind: celebrities with millions of dollars and several attorneys on retainer either don’t make an estate plan or engage in DIY estate planning. Although she was diagnosed with pancreatic cancer several years before, Aretha Franklin never sat down with an estate planning attorney to make a will, trust, or other plan for her more than $80 million dollar estate.
Instead, her sons ended up battling in probate court over whether a 2010 handwritten document found in a locked cabinet, or a 2014 handwritten document in a notebook found under a couch cushion, constituted her will. While holographic (handwritten) wills are recognized in Michigan, it was not immediately clear that either document was intended as a will.
When it comes to estate planning, a lack of clarity leads to confusion, confusion leads to conflict, and conflict leads to costly litigation. Work with an experienced estate planning attorney who can help you avoid all of the above. You may never be a celebrity, but you can feel good about avoiding estate planning pitfalls that caught some of your favorite celebrities. To learn how to protect your estate and your family, contact The Law Office of Dana M. Kyle to schedule a consultation.