Just because you have money doesn’t mean you are immune to the same mistakes those with less money make…in fact they are the same when it comes to estate planning. The only difference is that the numbers are larger, things take longer, and are generally much more complex.
Outdated documents, beneficiary designations, and other estate planning mistakes can keep your heirs tied up in court for years. Your estate can be consumed with taxes, penalties, and a host of legal fees. Not to mention the frustrating scenario where people you didn’t want to receive your assets end up getting the lion’s share of your estate.
That, says Kiplinger in an article titled “6 Estate-Planning Mistakes Celebrities Made,” could happen to your family if you don’t update your estate plan on a timely basis. Making sure that your assets and prized possessions end up with the right people requires more than just having a will created. Many accounts have designated beneficiaries, such as IRAs, 401(k) accounts, and insurance policies.
For example, if the person designated to be a beneficiary on one of these accounts is an ex-spouse or a family member from whom you’re estranged, the named beneficiaries supersede anything contained in your will.
Just as with everything about celebrity lives, their estates are oversized as well. So when it comes to their mistakes and estates, these mistakes can be significant and also oversized, compared to normal, non-celebrities. Let’s take a look at several celebrities and some of their faux pas when it comes to estate planning.
Prince died intestate with no will. A judge in Minnesota made the decisions about his assets and there were significant delays due to people claiming to be his heirs. It has been two years since his death and heirs have yet to receive their inheritances.
Singer Barry White died in 2003 while he was separated but not divorced from his second wife. She inherited everything as a result of his situation. His live-in girlfriend of several years and his nine children received nothing. The legal battle got ugly with his girlfriend, daughter, and son…all filing lawsuits.
When actor Heath Ledger died, his will left everything to his parents and three sisters. His daughter and her mother were left with nothing. His family later gave all the money from the estate to his daughter.
Olympic sprinter Florence Griffith-Joyner died at age 38. It was believed that she had a will. However, no one could find it. The legal battles between her husband and her mother went on for years. Most estate planning attorneys will keep a copy of your will and other estate planning documents on file.
When acting legend Marlon Brando died, he left most of his approximately $26 million estate to his producer and other associates. A long-time housekeeper said that Brando had promised to give her his home when he died, but he never put it in writing. She sued the estate for the value of the home plus $2 million in damages. The case settled three years later for $125,000. If you are making promises to people that you wish to take care of, put those in writing.
Pop icon Michael Jackson’s death set off a long series of legal battles over his estimated $500 million estate. He had created a revocable living trust designed to pass his wealth to his children and his mother when he passed. However, he never funded the trust. His entire estate had been left outside of the trust. That meant that it had to go through the probate process, while his children and mother lived on an $8 million annual allowance managed by the estate’s executor and a judge. There were also many legal challenges from creditors and family members.
To help you get on top of these issues so they don’t happen to you, use life-changing events, such the birth of a child, as a reason to review and update your estate plan. In the case of Barry White, it is important to make sure you are legally divorced before making any changes to your estate. It is also important to update your will, your financial and healthcare power of attorney, and check your beneficiary designations.
Estates of celebrities and “regular” people can avoid all of these mistakes by creating and updating their estate plans with the help of a qualified estate planning attorney. It is also very important to keep the original documents in a safe, readily-accessible place and tell at least two people where they are located. And if you are making promises to people that you wish to take care of in your estate plan, make sure you put those in writing.