(Cautionary) Tales of The Rich and Famous

You'd think that rich and famous people would have the financial resources, existing lawyer relationships and just plain good common sense to take care of their lifetime assets and their loved ones through proper estate planning... but that's often not the case!

Guess What All These Rich & Famous
Have in Common?

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Abe Lincoln, Picasso, Howard Hughes, John Denver, Walter Cronkite, Sonny Bono and Barry White - - how are they all related? None of them had an estate plan, even just a simple Will. And lots of messes ensued.

We're always preaching about the need for not only a Will, but better yet a Living Trust, so we don't need to say more here. (For more information, you can attend one of our monthly seminars.)

Do-It-Yourselfers Beware!

OK. You know you need an estate plan, but rather than engage the services of a skilled attorney, you think you can keep the price down or keep it simple by doing it yourself (or maybe with the help of Legalzoom or the Suzie Orman trust kit). Think again!

Take the case of Warren Burger, Chief Justice of the U.S. Supreme Court and a lawyer (but one who didn't specialize in estate planning). He decided to save the money and write his own Will, just 176 words long, but his family later paid for it big time - - $450,000 in estate taxes and countless thousands in legal fees going in and out of court for approval of actions, all of which could have been avoided by an estate plan drafted by a well-qualified attorney!

Don't Write on a Napkin

Baseball Hall-of-Famer Ted Williams had an attorney write a Will saying he wanted to be cremated. However, his children from a second marriage produced, after his death, a greasy napkin note apparently amending his Will and stating he wanted to be cryogenically frozen, which they did. His daughter of his first marriage then battled them for years and finally gave up when she ran out of money.

His good name and legacy could have avoided being the target of a lot of Saturday Night Live jokes (remember the skit with his crazy, severed, talking head?), if he had only gone to an attorney to properly re-write his estate plan.

We sometimes recommend that clients describe their desired financial and burial wishes (or smaller estate details like the distribution of personal property) in a separate "letter of instructions". But if some provision of your estate plan is so important that you don't want to leave it up to court interpretation or the assumed good intentions of the Executor of your Will (or Trustee of your Living Trust), you should probably place your desires in writing as part of your Will (or Trust). Take the case of Princess Diana...

England's beloved Princess Diana had a perfectly good estate plan, until she messed it up. She took it upon herself to write a "letter of wishes" to her Executor, requesting her personal effects (including some very expensive jewelry) be divided between her sons and her godchildren. Unfortunately, her sister and mother, who acted as Co-Executors, chose not to follow her wishes. The godchildren fought in court, at great expense, and wound up getting near nothing. If Diana had instructed her attorney to properly revise her Will, she wouldn't have "rolled over in her grave" observing this terrible family fight (on top of all the disgusting paparazzi frenzy and media gossip surrounding her passing).

Don't Name the Butler as Trustee

Too often, the choice of Executor or Trustee is made too quickly, without much thought (or input from experienced legal counsel). The person you choose may not be competent enough to handle the responsibility or may have an inherent conflict with some of your intended beneficiaries.

Tobacco heiress, Doris Duke, had an estate over $1 billion that she entrusted to her closest confidant and friend, her butler. He was appointed to be Executor and Trustee of a large foundation, but his lack of skill (and suddenly enhanced spending habits) led him to squander vast amounts, until he was finally removed by a court.

Famous rock guitar player and member of "The Grateful Dead" band, Jerry Garcia, named his third wife as Executor of his Will. This, quite predictably, led to all sorts of ungrateful in-fighting between the third wife, his other surviving ex-spouses, and children of different marriages.

Choosing the right Executor (and Trustee) is an important part of setting up your estate plan - - and your choice should be periodically reviewed. Maybe someone you named to act has since proven they're not so good with money or don't have the same close relationship with you and your beneficiaries. Maybe a Co-Executor (or Co-Trustee) should be added as a check and balance, or an independent, non-family member named (like a bank or Trust company).

Trust Your Heirs By
Keeping It in Trust

We often recommend that a beneficiary's inheritance not be immediately distributed, out of Trust and directly into his or her own name - - because other options are available where a beneficiary can have the use of assets and even be in charge of them but be better protected (from spouses, creditors and other predators). Holding an inheritance in Trust may also ensure that the right next person will receive your assets someday after the first named beneficiary passes on.

Movie idol Marilyn Monroe left ¾ of her estate to her acting coach, Lee Strasberg. She had verbally stated to many people, including Lee, that she wanted him to be supported and to eventually use the rest of her estate to open a personal foundation to honor her legacy. Lee never got around to setting up the foundation and when he died his third wife, whom Marilyn never knew, inherited everything and proceeded to sell off many of her personal possessions, pocketing millions! Marilyn's estate plan should have provided the gift to Lee be held in Trust, with proper provisions for the remainder to pass to her intended foundation.

Like Marilyn Monroe, psychedelic guitarist Jimi Hendrix suffered a sad, self-inflicted death - - followed by an unintended estate calamity. He was very close to his brother and wanted him to benefit from his estate. However, due to inadequate planning, Jimi's father inherited the estate, eventually passing it down to the father's adopted daughter from a later marriage, with Jimi's brother winding up with nothing. Again, the estate plan could have provided a trust to take care of Jimi's father, with his brother being a secondary beneficiary, possibly receiving some while the father was living and the rest when he passed away.

Rock singer and song writer Jim Morrison, of The Doors, who suffered a similar demise as Marilyn and Jimi, seemed to do the right thing when he left his whole estate directly to his wife. Unfortunately, she died shortly thereafter, without any surviving children and no Will, so Jim's entire estate went to her father, who had openly hated and antagonized Jim while he was alive! Again, a trust for his wife could have avoided this tragically ironic result.

Listen to Your Consigliore

Actor James Gandolfini, best remembered as mob boss Tony Soprano, died this past year with an estate of over $30 million. He should have consulted "the family counsel" before writing a "loaded gun" Will that backfired on him and his family - - resulting in needless millions in estate taxes and effectively cutting out his children of a prior marriage from most of his fortune. This all happened because he left too much directly to his most recent wife. Had he simply used what we call "Exemption" and "Marital" (or "B-C") Trusts inside his Living Trust, he could have significantly reduced or deferred the taxes, taken care of his current wife, and made sure that assets not used for her support and health needs passed to his children of a prior marriage.

Understandably, a lot of people who aren't so rich no longer worry about Estate Taxes, given the greatly increased exemption (the amount you can pass tax-free) of $5.34 million ($10.68 married). However, we see many "blended" or "mixed" families - - with children of more than one marriage - - where a "B-C" Trust may be in order and hasn't been properly addressed (and a huge family war is bound to break out!).
By the way, the small percentage of James Gandolfini's estate - - still representing millions - - that did go directly to some of his children, was setup to be distributed to them at the tender age of 21. What a mistake (can you image what they'll do with it?). Again, the children's shares could have been held in trust for them and distributed over time, as needed, or when they proved ready to handle that money responsibly.

If You're Wondering How We Knew
All These Stories, Here's Why

All these tales of the Rich and Famous are readily available to us because their estate matters wound up in Court and became public record - - either because they had no Will or plan at all, had a defective one, or in some cases even had a Living Trust (which is supposed to avoid Court) but failed to properly transfer or "fund" all their assets into the Trust.

For example, pop singer extraordinaire Michael Jackson had a Living Trust but too many assets weren't in it, so a probate Court got involved and all his dirty linen got aired out for everyone to see (and smell!).

Let his story (and all the others) be a lesson to you. Periodically review your plan - - and your assets - - to be sure they're all in order (and you can avoid the tabloids). We're here to keep your "celebrity" private!

And while we're reviewing your plan, let's re-think your Trustees, beneficiaries' shares (and how and when they'll receive them) - - based on today's facts, not the quick snapshot you took years ago at the time you set up your estate plan. Proper up-to-date planning is important even if you're not rich and famous!

Is Justin Bieber a Grinch?

Is Justin Bieber a Grinch?

Grinch, Scrooge or just plain unknowledgeable about charitable giving, the rock Megastar could learn a thing or two about gift-giving from the elder statesmen in the music industry.

Celebrity Giving

Some celebrities are almost as famous for their charitable causes as they are for their entertainment careers. Creating awareness for a cause is one of the easiest things a star can do. Endorsing a sports drink or a luxury automobile by wearing the company's logo or using the product at a press conference can generate thousands of dollars in sales with this simple and effective marketing. When a celeb gives his or her stamp of approval to a charity or awareness, volunteerism and donations can really pick up.

According to Forbes magazine, the star who has devoted the largest percentage of personal publicity to a cause is rock star Jon Bon Jovi. The Jersey cowboy and his band generated nearly half a million dollars in press for his pay-what-you-can restaurant Soul Kitchen. That's more than 2% of Bon Jovi's own media value.
Paul McCartney works with PETA (People for the Ethical Treatment of Animals). His contributions are estimated at more than $1 million, which is roughly 1.4% of his personal publicity value. In addition, McCartney's older audience is better suited with more disposable income to donate than Bieber's. The "Bieb" ranked at the very bottom of a recent study [Bieber generated just over $82,000 for the nonprofit Pencils of Promise, which builds schools in the developing world and trains young people. That's just .002% of his personal publicity value which is nearly $44.5 billion!].

Publicity dollars are one thing, but what about opening the pocketbook and writing a check? That's where you can see the true intentions of a person.

Media giant Oprah Winfrey and her Oprah Winfrey Foundation ranked 19th in the General Sentiment survey reported by Forbes. Keep in mind, however, that the talk show mogul has several charitable relationships. For example, her Angel Network has raised over $80 million for needy people worldwide.

Everyday Giving

While you and I may not be able to generate millions of dollars in donations for our favorite charity by our personal endorsement, we can show our dedication to the cause by assigning the dollars we do have to that organization in the wisest manner possible. Through thoughtful and careful financial planning with a knowledgeable estate planning attorney, the average person can make a very meaningful gift in his or her estate plan. An estate planning attorney can provide creative and insightful suggestions regarding how to use your money to give your favorite charity with the greatest return. In addition, your attorney can help reduce or eliminate the tax burden when it receives your gift.

Don't be a Grinch or a Scrooge, and don't be uninformed about how you can best plan to make your charitable donations really count. Consult an estate planning attorney and discuss the most effective way to use your money to do good work after you're gone.