Estate Planning Disasters
According to published sources, about 55% of Americans do not have a will. Surveys have shown that the top reason why Americans do not have a will or some other estate planning device such as a living trust are the following:
- they put it off;
- they don’t believe they have enough assets; or
- they believe it is too expensive to set an estate plan up; or
- some combination of the above.
The following are examples of estate planning mistakes involving celebrities and wealthy people:
1.Ted Williams (Major League Baseball Legend): At the time of his death in 2002, he had a will that said his body should be cremated, and another will that said he should be cryogenically frozen. A fight among his children arose. This eventually lead to his head being cut off. At present, his body and head are frozen in Arizona at Alcor Life Extension Foundation. ABC News has reported that his head was severed and is kept in a pot, separate from his body.
2. Sonny Bono (Singer and Congressman): He never had a will prepared. As a result, he died intestate. A lawsuit was filed by ex-wife, Cher, seeking $1.6 million in unpaid alimony, an alleged child later discovered not to be his, by DNA testing, and his widow, Mary Bono.
3. Heath Ledger (the Joker): He never updated his will after the birth of his daughter, Matilda. At his death in 2003, his estate was split between his parents and sisters. But, they eventually agreed to give all the money to his daughter.
4. Pablo Picasso (Painter): Failed to have a will or trust prepared. Many of his paintings were used to pay a large tax bill to France, via transfer to the Musée Picasso in Paris. The rest were fought over by his illegitimate son, Claude, and his five siblings. It took over six years and $30 million to lawyers and appraisers to settle the estate, according to an article published in Vanity Fair in 2016.
5. Philip Seymour Hoffman (Actor): An actor that failed to update his will, which was drafted by a CPA, after the birth of his two daughters. Because he was not married to his then girlfriend, there was an approximate $12 million estate tax owed since his estate could not take advantage of the estate tax marital deduction.
6. Joe Robbie (Owner of Miami Dolphins): Estate planning with a pour-over will and revocable inter vivos trust intended to defer estate taxes until after the death of his wife, Elizabeth. However, things did not work as planned. His wife demanded her “elective share” as spouse, 30% of the husband’s illiquid estate. This created a $47 million tax bill that could only be settled by selling off his team, according to a 2015 analysis of an online sources. His 11 children battled over his estate.
7. James Brown (“Godfather of Soul”): A 12-year legal battle among several blended families.
8. Michael Jackson (“The King of Pop”): He died in June of 2009 while in the middle of child abuse scandals. Executors valued the estate at $7 million, claiming his name and likeness were almost worthless due to his reputation. But, the IRS claimed his song copyrights made the estate worth $1.13 billion. Years later, the IRS litigation continues. If the estate loses, enormous tax bills could leave the government seizing and selling off his music.
9. Prince: Prince died without a will in 2016. His estate, which appears to have a value of more than $200 million, will somehow be divided up by his six siblings and half-siblings, and possibly by a man alleging to be his son. After incurring over $45 million dollars in legal fees, the potential heirs have yet to receive any funds.
10. Barry White (Singer): He passed away in 2003 in the midst of divorce proceedings. Technically, he was still only separated from his wife, therefore his wife received everything. Not his current girlfriend, who was the mother of nine kids.
11. Marlon Brando (“The Godfather”): Most of his $26 million estate went to his producer and colleagues. However, his longtime housekeeper and friend was promised his mansion, although it was never put in writing. She settled against his estate for just $125,000.
12. Marilyn Monroe (Hollywood Star): She died in 1962 of a drug overdose and left much of her estate to her acting coach, Lee Strasberg. This amounted to only about $800,000, however Strasberg also claimed a right to her image. This led to an eventual payout of over $30 million to Lee’s third wife, Anna, a woman Monroe never even met.
13. James Gandolfini (“Tony Soprano”): He died in 2013 of a heart attack in Rome. His will left 80% of his $70 million estate to his sisters and daughter. As his estate plan was will-based and went through probate, every aspect was available to the public. He left $7 million of life insurance proceeds in an irrevocable life insurance trust (ILIT) for his son to avoid taxation. His baby daughter will receive all of her share at the age of 21. Poor estate planning forced almost $30 million to be paid to the IRS in estate taxes.
Most Americans may not identify as super wealthy or as celebrities. However, most do have assets and people they care about. Yet, failure to plan, as they say, is planning to fail.