Estate Planning of SC, LLC

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Lessons from Celebrity Estate Planning

 

Let’s face it, celebrities aren’t always the best role models, but there are many lessons to be learned from their mistakes, and sometimes, they actually get it right.  I spoke to Nat & Curtis today on WLTX regarding estate planning.  Here is a link.

 

 

 

 

 

 

Funding a Revocable or Living Trust

Michael Jackson died June 25, 2009 and it was immediately apparent that his family members and the executors of his estate had adverse interests.  Recently, it was announced that Jackson’s Trust would be funded with $30 million; however, this does not mean that these funds will now be distributed to his family.  Forbes has announced that Jackson’s estate is the top earning estate of a deceased celebrity this year, earning $170 million in the past 12 months.  However, Jackson’s family members have not benefited from his celebrity wealth since his death; except that their living expenses have been paid.  Now that the Jackson Trust will be funded, the Trustees will be able to distribute funds to Katherine Jackson and his three children in accordance with the terms of the trust.

Jackson created his Revocable Trust (also known as a Living Trust) during his lifetime, but he neglected to transfer his assets to it.  If he had, then his estate would have avoided probate, ensuring that the details of his estate remained private and avoiding the cost and difficulty of probate administration.  In South Carolina, the probate court only charges a fee of ¼ of one percent of the assets that pass through probate, but other states have much higher probate court costs.

Keep in mind, Farrah Fawcett also died in 2009, but what have we heard about her estate?

Keeping Your Estate Plan Current

Amy Winehouse died this year at the young age of 27.  Her estate has been reported in varying amounts ranging from $15 to 30 million.  Winehouse had divorced her husband, Blake Fielder-Civil in 2009, and he is currently in prison for burglary and related crimes.  It is also rumored that he is to blame for her drug use.  One of the main concerns that arose after Winehouse’s death was that Fielder-Civil would manage to inherit her wealth.  In August, it was reported that Winehouse had updated her estate plan to ensure that her estate passed to her family.

It is important to update your estate plan and beneficiary designations on your life insurance and retirement accounts whenever a significant change in your life occurs.  Winehouse is proof that tragedy can strike at any age and reminds us that having a will is not just for more mature, experienced people.  Fortunately, Winehouse was a great role model for realizing the importance of having a will and keeping her plan current.

Kim Kardashian’s second marriage was a grand affair, but only lasted 72 days.  While the rumors are swirling about whether the wedding was a publicity stunt, let’s assume that Kim and Kris believed, like most engaged couples, that this marriage was forever.  When a couple gets married, it is important for each of them to sign new Wills, Durable Powers of Attorney and Healthcare Powers of Attorney to avoid laws like the omitted spouse’s share.  No matter how short the marriage, when you get married and do not sign a new will, your surviving spouse may petition the probate court for one-half of the estate at your death.

Speaking of Separation

Kim Kardashian’s short marriage also reminds us that once a couple has determined that the marriage is not going to work, the estate planning documents need to be updated once again, prior to the final divorce decree.  In South Carolina, a couple must endure a separation period of one year in order to obtain that final decree.  During that time, a surviving spouse is entitled to the elective share.  The elective share is the right of every surviving spouse to inherit one-third of the estate, and this elective share does not terminate until the final divorce decree is issued.  If Kim were to die during the separation period, would she want Kris to inherit even one-third of her estate?  I seriously doubt it – and most other people wouldn’t either.

Worse yet – what if your ex-spouse continues to have the power to make end of life decisions for you? You also need to consider changing your agents named under your Durable Power of Attorney and Healthcare Power of Attorney.  This happened to Gary Coleman, who divorced his spouse in 2008, as we all watched on an episode of “Divorce Court.”  His ex-wife, Shannon Price, who has insisted that they still considered themselves to be happily married despite the divorce, pulled the plug after Coleman sustained a head injury from a fall down some stairs.  Did Coleman want Price to continue to make healthcare decisions for him?  If he had signed a new Healthcare Power of Attorney, we would have known.

The Truth is Stranger Than Fiction (and Sometimes Celebrities)

I have been practicing in estate planning and probate administration for the last 10 years and, in that time, I have heard a lot of scary and interesting stories from celebrities, clients and friends.  I know that you all share these stories at your holiday gatherings too – they are really interesting to watch from afar, aren’t they?  Try using these celebrity stories this year to ensure that your family and friends don’t make these mistakes.

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