Top 5 Estate Planning Mistakes Celebrities Make

Top 5 Estate Planning Mistakes Celebrities Make

Top 5 Estate Planning Mistakes Celebrities Make

The notion of “I don’t need a will” isn’t for only those who don’t feel they own enough to pass along; sometimes those with too much feel the same way. The truth is, regardless of income, background, or status, many people fail to plan properly when it comes to their estate. Looking at some high-profile cases, here are the Top 5 estate planning mistakes celebrities often make.

1. Not having a will

Music legend Prince, who passed away in 2016, is the current poster child for the mess you create when you don’t have a will. Like more than half of his fellow Americans, the “Purple One” failed to draft a plan, leaving behind an estate worth more than $200 million and little insight as to what to do with it. Surviving family members, managers, and entertainment attorneys were tasked with sorting out his estate, including a large tax bill. (An estate tax is usually due nine months after an individual’s death.) An estate administration team was named to oversee the process to organize the estate and hand it over to Prince’s heirs.

Famous artist Pablo Picasso died in 1973 with an estate worth more than $250 million (or $800 million in today’s dollars) but no will. He left behind thousands of paintings, sculptures, drawings, illustrations, and sketchbooks, as well as five homes and nearly $6 million in cash and gold. The fight over the distribution of his estate took years and cost millions of dollars but eventually his widow, children, and grandchildren received their inheritance.

2. Leaving out a child or significant other

Oscar-winning actor Heath Ledger had a will in place but failed to name his daughter as a beneficiary before his death in 2008. His parents and sisters initially inherited the actor’s fortune, but the family agreed to donate its entirety to Matilda Rose, the actor’s daughter with ex-girlfriend Michelle Williams. Ledger’s Oscar – won for his role as the Joker in “The Dark Knight” – was on display in the actor’s hometown of Perth, Australia, but has since been delivered to his daughter.

R&B singer Barry White also had a will when he passed away in 2003, but it was out of date and the source of a heated legal battle among his surviving family members. According to the will, White’s $20 million estate went to his second wife Goldean (though they had been separated for nearly a decade). White’s longtime girlfriend Katherine Denton received nothing, though she claimed White told her she and their newborn daughter could live in his Los Angeles home indefinitely. (A court ordered a DNA test and results revealed White was not the biological father of Denton’s child.) Recently, several of White’s children have claimed they have been cut off from accessing their father’s estate and are threatening legal action.

3. Failing to use a trust or fund it

Troubled actor Philip Seymour Hoffman was firmly against turning his children into “trust fund kids,” so when he died in 2014, his estate went to their mother and Hoffman’s longtime companion. According to his lawyers, Hoffman wanted his children to develop a strong work ethic and experience culture and the arts. But trusts can be set up to dole out funds at various increments or life stages: for example, a portion of the trust could be awarded when each child finished college or began their career and had stable employment for six months. Hoffman repeatedly ignored or rejected his attorneys’ advice, leaving the financial future of his children in jeopardy, news reports said.

Pop music icon Michael Jackson had his share of financial battles while he was alive. That didn’t stop when he passed away in 2009; in some cases, they got worse. While he did the right thing setting up trusts for his three surviving children, funding those trusts correctly proved problematic. An estate administrative team did a great job eliminating the singer’s debt by increasing revenue through image licensing, a new film, new albums, and the sale of Jackson’s Neverland Ranch. But in the wrong hands, his heirs may have been worse off.

4. Not planning for taxes

James Gandolfini, the conflicted Mafia boss in HBO’s “The Sopranos,” took the right steps toward securing a nice financial future for his family and friends. But he didn’t go far enough. Gandolfini, like so many others, failed to consider how much the Internal Revenue Service would take from his estate. When he died, his estate was worth around $70 million. But most of that was unprotected and federal and state taxes amounted to nearly 55 percent. As a result, Ganolfini’s son, wife, and other family members received far less from his estate than he planned.

5. Not including personal property

Robin Williams, one of my favorite actors and comedians, committed suicide in 2014 after struggling with the early stages of Lewy Body Dementia. His estate plan was robust, including clear instructions on what to with money, property, and even his image and intellectual property upon his death. What wasn’t accounted for were the personal items and memorabilia he left behind, and it was the source of contention among his widow and Williams’ children. Eventually things were sorted out in a probate court, but the dispute took an unnecessary toll on the actor’s family.

The great civil rights leader Dr. Martin Luther King Jr. also left no will behind and failed to indicate his wishes for the future of her personal property. In recent years, this uncertainty led to disagreement and court filings among his surviving children over the fate of his 1964 Nobel Peace Prize medal and his personal Bible. Last year, a judge ended the dispute, releasing the items back to Dr. King’s estate, but there’s no word on whether the medal or the Bible will be up for sale any time soon.

When it comes to drafting your will, I recommend two things: don’t be rash, and don’t ignore your attorney’s advice. Often, there are a lot of possible scenarios you’ll fail to consider, and it’s my job as a lawyer to think through every outcome. As you consider creating or updating your estate plan, give me a call at (214) 974-8940 and let my team show you how we can do this the right way.

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ATTORNEY CHRIS PARVIN is Board Certified in Estate Planning & Probate Law by the Texas Board of Legal Specialization. Mr. Parvin is the Managing Partner of the Dallas, Texas law firm of Parvin Law Group, P.C. and serves as an Adjunct Professor of Law at Texas A&M University School of Law. Mr. Parvin can be reached by email at chris@parvinlaw.com.

Parvin Law Group, P.C. is a Concierge Law Firm in Dallas, Texas with attorneys practicing law in the fields of Estate Planning, Probate, and Business Law.