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Nevada Estate Planning and Asset Protection Blog

Monday, May 21, 2018

Celebrity Estate Planning Mistakes

Just like regular people, celebrities also fail to adequately plan for their estate.  Estate planning is a vital tool that provides guidance in the event of a death.  It is a common belief that because celebrities have much more wealth than the average person, protecting that wealth would be of the utmost importance.  However, there are cases that prove that to be untrue.  Having copious amounts of money and assets do not make a savvy financial planner.  For this week, we are discussing celebrities that didn’t properly plan for their estate.

 

1.      Prince Rogers Nelson (“Prince”) – No Will

The most recent estate planning cataclysm is Prince’s multimillion-dollar estate left without a will.  After Prince’s death, 45 potential heirs came forward to benefit from the unprotected estate.  A Minnesota Judge decided who Prince’s heirs were, ruling that his sister and five half-siblings were the rightful heirs.  Prince’s estate continues to be litigated.  Various record deals, rights to unreleased music and appeals from other potential heirs must be resolved before the heirs can collect from the estate. Leaving such a large estate open to court interpretation makes the estate hard to manage and more difficult for beneficiaries to inherit.  Read more on Prince’s estate here.

 

2.      Whitney Houston – Outdated Will

Unlike Prince, Whitney Houston had a will, however her will was created in 1993, leaving everything to Bobbi Kristina Brown (Houston’s only child) and was never updated thereafter.  Accounting for the future is a major part, if not the most important aspect of estate planning.  Houston’s will should have been updated as her success grew.  Additionally, the terms for distribution did not adequately protect Houston’s assets.  In her original will, Houston’s entire estate was to go Bobbi Kristina Brown in three (3) installments, giving Bobbi Kristina two-million dollars at the age of 18.  Furthermore, Bobbi Kristina passed away shortly after her mother.  Houston’s will did not have specific distribution instructions if the beneficiary (Bobbi Kristina) could not receive the distribution.  Therefore, the question of whether the estate goes to Houston’s remaining heirs or gets litigated through Bobbi Kristina’s estate becomes relevant. Read more on Whitney Houston’s estate here.

 

3.      Joan Rivers –Tax Planning

Joan Rivers died leaving behind a pour-over will and a revocable living trust, which is all seemingly proper.  However, in her trust documents Rivers states that she was domiciled in California, but a resident of New York.  The problem being that New York, while it has a lower income tax, it has an estate tax, while California does not have a state mandated estate tax.  A domicile is where you always intend to return and where most of your primary contacts are.  A residency is where one physically lives on a temporary or semi-permanent basis.  It is not uncommon to incorporate tax-strategy into your estate plan, especially when your estate is large like Rivers’.  However, splitting residency and domicile can waive a red flag to state tax authorities.    A court must look at various factors including the intention of the deceased in making one state their domicile and another their residence in determining where the tax liability will lie.  Read more about Joan Rivers estate tax issue here

 

4.      Chief Justice Warren Burger – The Do-It-Yourself Will

Chief Justice Warren Burger died with an estate worth $1.8 million dollars, and a 176-word, self-typed will.  Although Warren Burger was a justice on the supreme court and a legal expert to the highest degree, it doesn’t necessarily mean that he was able to plan for his estate adequately.  In fact, his family purportedly paid $450k in estate taxes, something that could have been planned for (and possibly avoided!) if his estate had been planned properly and professionally. Burger’s family had to invest time and money in getting court approval to sell real-estate and complete other administrative acts, things that would be addressed in a standard, professional document. Even legal experts need assistance in estate planning.  Read more on Justice Burger here.

 

5.      Florence “FloJo” Griffith Joyner – The Missing Will

When Olympic gold medalist, Florence Joyner, died in 1998, her will was nowhere to be found and thus opened her estate up to probate.  Telling your closest family/friend/confidant where your estate planning documents are located is a vital step in ensuring that your wishes are carried out when you die.  Without the actual documents, the estate plan can become ineffective.  If you created your estate plan with an attorney, your attorney’s office may have copies of the signed documents, however if your family does not know about the attorney or creation of the trust, even the copies may be difficult to locate.  A lack of documentation to prove the existence of a will, like in Florence’s case, may lead to messy probate matters that will require court interference.  Read more on Florence Griffith Joyner’s estate here.

 

Celebrities are not the only ones who overlook the importance of estate planning.  Strategizing to create a multi-faceted and smart estate plan is key and something that regardless of your celebrity status, is essential to anyone with some asset accumulation.  Finding your estate in any of these situations is problematic.  After reading through these estate planning oversights and other estate planning nightmares, think about your situation and how any of these outcomes may pertain to you.  If you don’t have an estate plan, contact an estate planning attorney today and get started!

-by Laura Bown (Law Clerk/J.D. Candidate, 2018, Boyd School of Law, UNLV) with Tiffany Ballenger Floyd, Esq. (Nevada & California Estate Planning Attorney), © 2018, Phillips Ballenger, PLLC



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