What We Can Learn from Celebrity Probates
Estate planning is a complicated undertaking for everyone and celebrities are no exception. As a society, we typically place celebrities on pedestals due to their massive incomes and the extravagant lifestyles that many of us dream of. Naturally, one might assume they have their finances in check and well secured. After all, what is the point of having all that money if such cannot buy you solid financial advice, right? Unfortunately, this is not always the case.
The Celebrity Truth
The adage that celebrities are just like the rest of us, just with a lot more money, has never been truer than in the realm of estate planning and administration. These superstars have often made errors of timing, plan selection, keeping plans that are outdated, or just not putting down anything in writing. Given such, the consequence of these actions surface after these celebrities pass away, as they often leave behind a complicated or incomplete probate that leaves their families even more frustrated as they mourn their loss. Not having a plan for your estate has negative financial complications as well. Thus, it is in our best interests to observe and learn from these public figures from a safe distance. The following are a few celebrity examples that should serve as lessons to everyone when regarding plans for our estates or property.
1. Philip Seymour Hoffman
Celebrity and actor Phillip Seymour Hoffman passed away in early 2014 after a drug overdose. The aftermath of this tragedy was another disaster where his estate had to pay more than $15 million in estate taxes. Put in mind that this obscene amount in taxes could have been avoided if Phillip had just married his partner leading up to his death.
Ms. O’Donnell was actually the mother of Seymour’s children and had been his lifelong partner. Nonetheless, after he died, she received about $20 million. However, if the two were legally married, Ms. O’Donnell would have received the whole $35 million that his estate held. The reason behind this advantage is because a spouse can receive an unlimited amount of tax-free money both during and after their life. Additionally, Phillip did not have his money in a trust. This made his estate public information after the filing of his will with the court.
Fending for Family
Many news outlets have assumed that this may have been Mr. Hoffman’s plan all along. However, one would imagine that most taxpayers would opt for their hard-earned money to remain with their families, if they have the choice.
What’s the Lesson Here?
As of this writing, if someone dies with a net worth of less than $5.43 million, estate taxes should not be among the concerns. Nevertheless, if the deceased was not married, but they left all their property to another person who is not their spouse legally, there is a decent probability that a legal process will take place.
Since substantiation is a costly process in terms of both time and money, it should be avoided as much as possible. Additionally, small estates can get devastated by the process due to the attorneys’ fees that will take out a significant chunk of the estate.
2. Howard Hughes
“I’m not a paranoid, deranged millionaire. Goddamit, I’m a billionaire.”
Howard Hughes‘ life’s story is the story of a true legend. The lack of a will, however, did not make for a happy ending. At the time of his passing away, the aviator, billionaire businessman was worth an estimated $2.5 billion.
Just a few days after Hughes had allegedly died from malnutrition and liver failure, a will that was written by hand mysteriously showed up in Salt Lake City at a Mormon church. Later referred to as the ‘Mormon Will,’ the handwritten will is reported to have been brought there by a gas-station owner.
Though seemingly strange, the situation gets interesting ” the same guy just happened to also have been named as a beneficiary of $156 million from the will. Nonetheless, the Nevada court decided that the Mormon will was fraudulent just like the numerous other wills that would show up over the next couple of years, as well.
Coming to a Conclusion
After searching extensively for the actual will, officials concluded that, in fact, Howard Hughes had not written a will, at all. Due to the amount of money that was at stake, Howard’s cousin, who was the estate’s temporary administrator, was involved in a court battle with the Howard Hughes’ Medical Institute. Additionally, the states of Texas, California and Nevada were also drawn into the battle with each laying a claim on the estate.
Howard Hughes Corporation for the Win
For years, the battle for Howard’s estate would rage on, involving multiple spouses and several individuals claiming to be either his wife, or long-lost children. Nevertheless, the Howard Hughes’ Medical Institute ended up with the lion’s share of the money. The rest was shared among attorneys and his relatives in the form of shares in the Howard Hughes Corporation, as well as money. The estate didn’t settle in its entirety until in 2010, almost three decades after Mr. Hughes’ passing.
What Can We Learn from This?
If given the opportunity to decide how to split one’s riches and estates, one still would not like for their lifes’ earnings to be split among attorneys, states, institutes, or even to distant relatives. Having a clear will, therefore, shall mitigate this risk as well as ensuring that your property is distributed as you best wish.
The popular pop icon passed away in 2016 without having constructed a will for his riches. The reason behind this, it is believed, is that Prince had lost all his faith in legal professionals due to a previous legal battle. This meant a lengthy and costly court process. In addition, there is currently an ongoing battle to determine who his heirs truly are.
What Lesson Can We Learn Here?
Possessing the appropriate legal documents will protect not only your legacy, but also that of your children or heirs. It may be unruly to leave behind a legal disaster for your family and make them stand a real chance of losing their inheritance just because of a personally bad experience that prompted you to develop a distrust for the system.
Preparing for the Long-Run
The conversation of how to proceed with your belongings after death, is not exactly an easy topic to discuss. Though uncomfortable, it is a conversation that should be established with you and your loved ones. Having additional legal support to guide you through these decisions, can help secure your wishes, as well. After all, it takes less time do the right thing. Without proper preparations, you may leave your loved ones in an ongoing battle and state of frustration when trying to prove what’s rightfully theirs. To avoid this, create an estate plan. If you would like assistance with creating an estate plan, JT Legal Group Can help.
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– Jack Ter-Saakyan, Esq.
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