We sometimes recommend that clients set forth their financial and burial wishes (or smaller estate details like the distribution of household personal property which is not of unusual monetary value) in a separate “letter of instructions”. But if these provisions are so important that you don’t want to leave them to court interpretation or to the assumed good intentions of the Executor of your Will, you should probably place these desires in writing as part of your Will (or Living Trust). Take the case of Princess Diana…
Even a Clear Letter of Wishes Can Backfire Too
England’s beloved Princess Diana had a perfectly good estate plan, until she messed it up. She took it upon herself to write a “letter of wishes” to her Executor, requesting her personal effects (including some very expensive jewelry) be divided between her sons and her godchildren. Unfortunately, her sister and mother, who acted as Co-Executors, chose not to follow her wishes. The godchildren fought in court, at great expense, and wound up getting nearly nothing. If Diana had instructed her attorney to properly revise her Will, she could have avoided this terrible family fight, which appeared in all the press (on top of all the disgusting paparazzi photos and salacious gossip surrounding the events of her passing).
A similar problem has arisen in the estate of Lakers basketball superstar, Kobe Bryant. He had been supporting his mother, and she claimed after his demise that he had promised to do so for her life. Possibly because he thought he would outlive his mother, his otherwise well-documented estate plan (including a Living Trust), failed to provide for his mother’s support. Kobe’s wife, who is his estate’s primary beneficiary as well as Co-Trustee, has reportedly been refusing to honor this commitment or disputing the amount of support. So, if you intend to benefit someone upon your passing (or even while you’re alive but disabled), you need to express your wishes to your attorney and have them clearly reflected in your estate plan documents.
Putting It Off Because You Can’t Think of Someone to Name
As Your Executor or Trustee?
Unfortunately, even when the choice of Executor or Trustee is made, it’s often made too quickly, without much thought (or input from experienced legal counsel). The person you choose may not be competent enough to handle the responsibility or may have an inherent conflict with some of your intended beneficiaries.
Tobacco heiress, Doris Duke, had an estate worth over $1 billion which she entrusted to her closest confidant and friend, her butler. He was appointed to be Executor and Trustee, as well as to run a large foundation funded by her. However, his lack of skill (and suddenly enhanced spending habits) led him to squander vast amounts, until he was finally removed by a court.
Famous rock guitar player and member of “The Grateful Dead” band, Jerry Garcia, named his third wife as Executor of his Will. This, quite predictably, led to all sorts of ungrateful in-fighting between his third wife, his other two surviving ex-spouses, and his multiple children of different marriages.
Choosing the right Executor (and Trustee) is an important part of setting up your estate plan - - and your choice should be periodically reviewed. Maybe someone you named to act has since proven they’re not so good with money or don’t have the same close relationship with you and your beneficiaries. Maybe someone you didn’t name has since proven to be a better candidate. Maybe a Co-Executor (or Co-Trustee) should be added as a check and balance, or you should appoint an independent, non-family member to be in charge (like a bank or Trust company).
Trust Your Heirs But
Keep Their Inheritance in Trust
We often recommend that a beneficiary’s inheritance not be immediately distributed, out of Trust and directly into his or her own name - - because other options are available where a beneficiary can enjoy the use of assets and even be in charge of them but may better protected from spouses, creditors and other predators. Holding an inheritance in Trust may also ensure that the right person you choose will receive your assets someday after your first named beneficiary passes.
Movie idol Marilyn Monroe left three quarters of her sizable estate to her acting coach, Lee Strasberg. She had verbally stated to many people, including Lee, that she wanted him to be supported and to eventually use the rest of her estate to open a personal foundation to honor her legacy. Lee never got around to setting up the foundation. When he died his third wife, whom Marilyn never knew, inherited everything and proceeded to sell off many of the film star’s personal possessions, pocketing millions! Marilyn’s estate plan should have provided the gift to Lee be held in Trust, with proper provisions for the remainder, either during Lee’s lifetime or at his death, to pass to her intended foundation.
Like Marilyn Monroe, psychedelic guitarist Jimi Hendrix suffered a sad, self-inflicted death - - followed by an unintended estate calamity. He was very close to his brother and wanted him to benefit from his wealth. However, due to inadequate planning, Jimi’s father inherited the estate, eventually passing it down to his adopted daughter from a later marriage, with Jimi’s brother winding up with nothing. Again, the estate plan could have included a Trust to take care of Jimi’s father, with his brother being a secondary beneficiary, possibly receiving some inheritance while the father was living and the rest when he passed away.
Rock singer and song writer Jim Morrison, of The Doors, who suffered a similar demise as Marilyn and Jimi, seemed to do the right thing when he left his whole estate directly to his wife. Unfortunately, she died shortly thereafter, without any surviving children and no Will, so Jim’s entire estate went to her father, who had openly hated and antagonized Jim while he was alive! Again, a trust for his wife, which named his desired secondary or successor beneficiary, could have avoided this tragically ironic result.
Listen to Your Consigliore
Actor James Gandolfini, best remembered for his role as mob boss Tony Soprano, died with an estate of over $30 million. He should have consulted “the family counsel” before writing a “loaded gun” Will that backfired on him and his family - - resulting in needless millions in estate taxes and effectively cutting out his children of a prior marriage from most of his fortune. This all happened because he left too much directly to his most recent wife. Had he simply used what we call “Exemption” and “Marital” (or “B-C”) Trusts inside his Living Trust, he could have significantly reduced the estate taxes, taken care of his current wife, and made sure that any assets not needed and used for her support and health eventually passed to his children of a prior marriage.
Understandably, a lot of people who aren’t so rich no longer worry about Estate Taxes, given the greatly increased exemption (the amount you can pass tax-free) of over $11 million (over $22 million married). However, we see many “blended” or “mixed” families - - with children of more than one marriage - - where a “B-C” Trust may be in order even if there aren’t any Estate Taxes due, to properly protect each spouse’s prior children (and prevent a huge war between families from breaking out!).
By the way, we’re not done with the mistakes of James Gandolfini’s estate plan. A portion - - still representing millions - - that did go directly to some of his children, was set up to be distributed to them at the tender age of 21 (Imagine, what would you have done with millions at that age?). And he’s not alone in making this kind of mistake. So did David Bowie, whose two children will each receive their full inheritance of about $25 million at age 25! Again, the children’s shares could have been held in trust for them and distributed over time, as needed, or when they proved ready to handle that money responsibly. And any remaining portion when they pass could be similarly protected for any grandchildren.
This Famous (and Highly Educated) Do-It-Yourselfer
Didn’t Fare Much Better
OK, you may understand the need to get an estate plan. But maybe you think that, rather than engage the services of a skilled attorney, you can keep the price down or keep it simple by merely doing it or amending it yourself (or with the help of LegalZoom or the Suzie Orman Trust Kit). Think again!
Take the case of Warren Burger, a previous Chief Justice of the U.S. Supreme Court and himself a lawyer (though not a specialist in estate planning). He decided to save the money, keep it simple, and write his own Will, just 176 words long. But his family later paid for it big time - - almost half a million dollars went to estate taxes and countless thousands were spent on legal fees for going in and out of Court, all of which could have been avoided by an estate plan, including a Living Trust, drafted by a well-qualified attorney!
If You’re Wondering How We Knew
All These Stories, Here’s Why
All these tales of the Rich and Famous are readily available to us because their estate matters wound up in Court and became public record - - either because they had no Will or plan at all, had a defective one, or in some cases even had a Living Trust (which was supposed to avoid Court) but they failed to properly transfer or “fund” all their assets into the Trust.
For example, pop singer extraordinaire, Michael Jackson, had a Living Trust but many of his assets weren’t in it, so a Probate Court got involved and then all his personal dirty linen got aired out for everyone to see too.
Let his story (and all the others) be a lesson to you. Periodically review your plan and your assets too - - to be sure they’re all properly in your Living Trust and you can avoid being a Probate Court “celebrity”!
And while we’re reviewing your plan, let’s re-think your choice of Trustees, your beneficiaries’ shares (and how and when they’ll receive them) - - based on today’s facts, not the quick snapshot you took years ago at the time you set up your estate plan. Proper, up-to-date planning is important even if you’re not rich and famous!
