Latest / The Practical Planner / Celebrity Estate Plan Horror Stories, From Prince to Heath Ledger
Transcript
- speaker-0: From the reports that I read, some have claimed that almost thirty million dollars could have been saved by restructuring the estate plan in a more efficient manner. So I have secondhand mortification for the attorney that prepared that. speaker-1: All right, what is up and welcome back, everyone, to another episode of the Practical Planner Podcast. I'm your co-host, Thomas Goldman. And here with me again today is Lisa Weigel. Lisa, I'm excited for this one today. I think this is one that we've maybe been talking about, honestly, even before I think you were at Wealth. but I think you're the perfect one to talk about this with. And it is all about celebrity estate plan horror stories. And I think anybody who is on social media sees probably a couple of these, come across their Feed every single year. I think there's some common themes that we can help realize, but I think there's a great takeaway from all these that advisors can see. And it goes to the ethos of who we are. planning has an impact. and so I'm gonna hand it off to you and let's just dive right in. And I think we'll probably hit on at least five celebrity horror stories, who they are, what happened, what the impact was, the issues, and what we can learn from. speaker-0: Yeah, absolutely. This is a really fun one to prepare for today. I started out my career in litigation. So some of these I've like had some like, whoo, okay. this is a long, a long, protracted litigation on almost every single one of these. But the you know, the first I would say consistent theme with some of these celebrity horror stories is they had a will, but it wasn't updated, or they had some sort of a state plan and it wasn't updated. So the a big example that you may have remembered from many years ago now, but Whitney Houston, she died in 2012 and she did have a will, so that's good. but the will was executed in 1993, which was just before her daughter was born. she was expecting Bobby Christina Brown at the time. And she created this will when she had a much smaller estate at the time. And it created a testamentary trust, meaning the will said, okay, if at my death, my daughter is under at this point, 30 years old, create a trust for her that I'll distribute out as follows. And it was 10%. She would get 10% of the estate at age 21, 30% at age 25, and 30, and then the balance at age 30. So Bobby Christina was 22 when Whitney died. She got 10%, which was $2 million at the time. And then she ended up dying in 2015. So she never received the balance of the estate. So there was a couple of issues with that estate plan because first of all, the Family members argued that at the time when she was 21 years old or 22 years old, Bobby could not handle that amount of money on her own. And it was an outright distribution just based on her age, kicked outright. and so there was some concern that there was, gonna be improper spending. And then obviously these big balances. simultaneously to that, Whitney's estate also exponentially increased in value over the course of the administration. So it created even more money. And then of course, since Bobby unfortunately died before the balance was distributed, then there was also a reallocation to Whitney Houston's brothers and her mother, because there was nobody left. Like Bobby didn't have heirs at the time. so that was but that was many years also of, you know, making sure that everything got paid out and then of course what to do when Bobby passed away prematurely. So yeah. speaker-1: How do how do we really change this, right? So one is, well, you know, update your estate plan. Like if you went from it was executed in 1993 to dying in 2012 and you're very wealthy, like I doubt she knew that testamentary trusts do not, you know, avoid probate. I think this is one that mixes up people all the time. I think, you know, the average person thinks, well, I have a trust. It's like, no, you have a trust inside of your will that doesn't avoid probate. In certain states, that's okay, right? Like if you talk to an attorney in like New Jersey or Texas, they're like, not an issue. Probate's smooth, probate's quick. I think there are still value for people to have trust in those states, but maybe less important than a state like California. But this one's kind of interesting because so then what, the money didn't end up going to any like who did it end up going to? speaker-0: Because Bobby Christina had no children of her own and she wasn't married, it ended up going back back up to Whitney's mother and her two brothers. So yeah, I think with this one, it's like to your point, revisiting the conversation with your financial advisor, revisiting your conversation with your estate planner to say, where are my kids in terms of their development, what they can handle? Is this still the structure that makes sense? Because, you know, looking at it, you know, when you're expecting your first child, you have no clue what. trajectory of your life is going to be or their life. So maybe that structure does make sense for some people, but in this scenario, the family members immediately were like, she can't, you know, this isn't the best way for her to receive the money. So maybe it would have been better to have it in like a discretionary trust for her benefit where she would get the whole pot, but not direct access. You know, it could be distributed by somebody they trusted. So just sort of like revisiting what are the circumstances as your kids get older and you start to know who they are and what they can handle. speaker-1: Yeah, that makes sense. Okay. What's the next one? speaker-0: Next one is Heath Ledger. He died in 2008. this is one where again he had a will, but it was created before the birth of his first child, his daughter Matilda. He had a $20 million estate at death, which ended up going because it was it was obviously didn't include her, it went to his parents and then his three sisters. So what I ended up reading was they did get the funds, or at least some portion, some large portion of the funds did ultimately go to Matilda. But it was through a settlement agreement. And one thing to point out here, and I I've heard this time and time again, is you know, people put like, you know, one of their kids on joint tenancy and they mean for everything to get distributed equally among their four kids, let's say, but the one kid is more helping them out, and so they put them on joint tenancy. If money legally goes through to a beneficiary, either through a will or that type of like POD, T O D arrangement, it's their money. So if they want to like do the right thing and get it. to the person that they probably intended it to go to, they're gifting that money. Now all of a sudden, you know, like that I couldn't find it because obviously it was a private settlement agreement. But I was curious, like, how did it go to the daughter? Because, you know, if they gifted it to her, that's their exemption that they're using to gift, you know, what was ultimately about twenty million dollars to this child. So yeah, again, the structure's important. speaker-1: It's crazy to me that Heath Ledger died in 2008. Dark Knight and all that was such a part of my child. And even when I was in college, everybody, we all love that movie. So it's wild to me. I had to Google that when you saw that. So I was like, no way, it was 2008. But okay. Anyways, but that is an interesting one. I actually had a a client situation where they had no idea. Uncle passes away, gives all of the money to one family member, sibling. And they're all like, nobody knew he had very much money. And two, they're all like, what? And so that family member who got it split it equally amongst everybody. That person's on my client. So I don't know what happened on their gift tax form and all that. But you know, I didn't know if there was a way to be like, that's kind of wrong. It should have got diverted. But it doesn't seem like there really is a way to do that. speaker-0: Yeah, the only thing I can think of in in the Heath example was if they potentially, it was through a settlement agreement. So I don't know, but my speculation is if you made a qualified disclaimer and basically said, I don't want this money, so potentially it could like get rerouted into intestacy, which would then potentially drop to the daughter. But like it's complex. Like that's that's not a guarantee that it's gonna go because you can't control where it goes if you make a qualified disclaimer. So otherwise, if you accept it and it becomes your money and then you give it away. Technically you're making a gift. So speaker-1: Yeah. So key note here is when you have kids, update your estate plan. it seems pretty obvious, but but also like when you when you work with people, you realize like, sure it seems obvious, but like you've never been busier in your life than, you know, having going from no kids to kids that you can see how you're like, how am I even working? Plus being a parent. Now I also have to get a notary or go to notary. Like you can see how things don't get done. So like, you know, seems obvious but it's not. speaker-0: Yeah, another example that I I didn't put, in my list of notes here, but like co the Kobe Bryant estate was similar where his estate specifically listed some of his children but didn't catch the last one. and it ended up, you know, working itself out and if you know, she was included. But one of the things to, you know, think about in your own personal estate planning is like, does it contain the sentence of like I intend to provide for any children born to or adopted by me in the future? And that's a way to, if you don't have them specifically listed, they can still get rolled up into your class of children. but if you don't have that and you're ni listing everybody individually by name, that's a way that they could potentially get missed. So yeah. Okay. speaker-1: What's the next one? speaker-0: so the next sort of two here are like no estate plan at all. It's always, you know, like going back to the other ones too, it's always so shocking to me that these celebrities, you know, they have managers and agents and all these like people, you know, that are professionals around them. number one, a will, you know, to your point, doesn't avoid probate. It's also not private. So like the fact that we're even talking about a lot of these, if they're wide open, you know, anything that goes through probate is gonna be public record. so you know, that and not having any estate plan at all is like completely crazy to me. speaker-1: I think the managers would do that, right? I've actually I've had managers for musicians, athletes reach out to me and be like, Hey, we're interviewing financial advisors, let's talk. You would think that they would be like, Hey, here's your I'm your manager. My job is to make sure you do all the right things. Like financial advisor, CPA, estate attorney are like literally no brainers. Like that is to do. And if a manager is not doing that, you feel like that's a pretty failed job. speaker-0: Yeah. and on the flip side, I feel for them in some ways because I've definitely had clients that have, come to me through my in private practice that had like a hundred and sixty million dollars and didn't have any estate plan to that point. And it's like they had been working, they had had these like, you know, great companies. And I'm like, How have you not had an estate plan yet? Like that's insane. So I mean, I get it, it happens. People want to put stuff on the back burner and then it just gets brand forgot about, but Then you end up with these scenarios where, my example that's still ongoing is the Prince estate. So he died in 2016. No will, nothing, no sort of estate plan of any kind. it's in the pr Minnesota probate estate court system right now. It's a hund I think it was 156 million estimated. And it would go by way of intestacy, which was to Prince's six siblings and half siblings. Of course, there was like some litigation on, you know, who was the rightful heirs and somebody claiming to be his son that was disregarded. there was also lawsuits involving three of the heirs sold their shares to a music publishing company. So there was some issues with that, some management of this Prince Legacy LLC that's that lawsuit's still on ongoing. And then there's a dispute between Netflix and the estate. So 2016 is now 10 years later. That estate is still in process. So speaker-1: Yeah, I looked this one up too, and it said that forty-five people have come forward claiming to be heirs. And by twenty nineteen alone, they had already reported forty five million in legal fees. And then the estimate is that over eighty-four million in estate taxes. So best case, forty four percent of the original estate is there. And that doesn't even include fees beyond twenty nineteen. speaker-0: You're right. We haven't touched on that yet. But that's the thing. Some of these, they end up in probate or they end up in any sort of like protracted hearings. Everyone's charging fees. You've got multiple. speaker-1: Expend it as long as possible, right? Their goal isn't to settle as quick. speaker-0: Yeah, it's totally. So hopefully they're everyone's a scrupulous attorney, but yeah, it definitely yeah, I've there's another estate that I looked at at one point that I think it was like forty attorneys worked on that case over three years and it was, you know, millions and millions of dollars worth of just legal fees, which, you know, depending on who you represent and what the claim is, potentially comes out of the estate balance, which can be huge. speaker-1: Yeah. This has to be one of the biggest and most well known ones. Yeah. speaker-0: Prince. Yeah, for sure. the next one I have is Tony Husia, which is the Zappo CEO. He died in twenty twenty at the age of forty-six. He had an S state estimated five hundred million dollars, never married, had no kids. At the time of his death, there it was believed that he did not have a will of any kind, no will was found, so they proceeded under Nevada and test state law, which would pass everything directly to his parents. Cause usually if you Most states, if you don't have children and you're not married, it's gonna go up the chain and then find the next closest love relative so the parents. but in March of 2025, last year, a will was purportedly found, dated in 2015, which was supposed to be Tony's will. it allocated some money to Harvard and to a trust, and included a no contest clause. But it is still currently in litigation. The will has been disputed vehemently by the family as being a sham. there was like Questions about were the witnesses even real? Where did they come from? how could how could he have signed it on that date? lots of juicy drama involving that state for sure. I think the latest update I saw was they had ordered forensic and linguistic testing on the will to see if it was a a legitimate will or not. So that one's still ongoing. We'll see what happens with that one. speaker-1: Wow, super interesting. These are all just like you're just like, man, it's not that hard to get an estate plan in place. maybe that's a this is like a shout out for wealth.com. if they would have just spent 20 minutes filling this out, you didn't have to go to attorney, even though you should. Yeah, even though Tony at five hundred million should, it's better than nothing. And at least then it follows what you want. You have the key people decided. Sure, you didn't optimize it, but like it would be better. speaker-0: Yeah, especially in in Tony's example, if that will is legitimate, there's, a three million dollar allocation to Harvard. people we'll we have an episode actually planned later on that's gonna talk about child free estate planning where, if you don't have kids, 'cause that's usually the primary driver to get you in the door to do your estate plan. But if you don't have kids, there's still so so many reasons to put your plan down, opt optimize your plan for charitable bequests and all that kind of stuff. So yeah. speaker-1: Super interesting. Okay. We have any more? A couple more maybe? speaker-0: One honorable mention, Steve Larson, who's the author of the Girl with the Dragon Tattoo trilogy that then became, you know, really actually I think they did a couple movies on that book. But his entire estate, I think he was a resident, I think potentially of North Carolina when he passed away, but it passed through Swedish default law. So this isn't US. but he had a girlfriend of 32 years who received absolutely nothing because he had no estate plan. And so it went by default to his father and his brother. So another good example of, you know. Especially if you're not married or you don't have kids, but there are people in your life that are really important to you, a big, big reason to do an estate plan, because otherwise it will not go to them. speaker-1: Yeah, that makes sense. One of them that we haven't hit on that I actually used in a hook in a tweet a long time ago was on chat with Bozeman. And because I found a stat that was like he passed away. When he passed away, they had an estimate they I think they like 50%. I gotta find the exact tweet. Like what percent of their estate just went to probate fees? I think it said Bozeman passed away with estimated $3.8 million probate estate. And because of No Will, California law mandated that 50% went to his widow. twenty five percent each of his parents, but the vast majority of it was all just paid in fees. speaker-0: Yeah, exactly. that's the other thing. If if you're going back to pro probate avoidance or non-probate avoidance, even if the estate, if the probate process in that state is not super onerous, like California, I believe their probate fees are tied to the value of the estate too. So it's not like you could just like, it's really clean and you know, there's not a lot of work to do. There could still be a reason why the fees would be really high in those states. But again, it's like the any sort of like question of where it needs to go, I mean, that is that was how I started my career. It was just, you know, litigating and you know, especially like with probate, you have to notify all the errors, which means you to find the errors, which is also a lot of work. so even if it's like there's no like nefariousness going on, I mean, it's it's a process for sure. speaker-1: know you have one other theme to hit on. Let's maybe go to somebody in this last one. speaker-0: Yeah. So the other theme I would say is not sophisticated enough. So we have we've we've got a couple of celebrities that did the did the right thing, got an estate plan, but didn't make it, you know, as sophisticated as it should be given the size of their estate. So the first example I have is James Gandalfini from The Sopranos. when he died, he was worth $70 million. He died in June 2013. He had a will that provided for his wife and daughter, as well as two sisters, some nieces, personal assistant, and his godson. the estate plan did not incorporate any sort of tax mitigation strategies for the spouse. So there was no like marital trust, no like marital deduction, Q-tip, all that stuff was not included. and then the str the way that the the bequests to the wife and children were structured, it also didn't take advantage of any sort of like. Tax allocation strategies or mitigation strategies. So I I couldn't see, the getting into the nitty-gritty of the exact planning or obviously the tax return itself. but from the reports that I read, some have claimed that almost $30 million could have been saved by restructuring the estate plan in a more efficient manner. So I have secondhand mortification for the attorney that prepared that. speaker-1: You would think that this would be the most common theme. to me, that's almost the big call out here is that the most common theme is actually no will, no updated estate plan, no trust, not picking the right people. You you would really think it'd be like, they just didn't do sophisticated tax planning. Not they didn't do the basics. speaker-0: Yeah. And mean, I always have to wonder in cases like this, did the attorney advise them like you should do this? And it's because sometimes clients are really obstinate. They're like, I don't want to overly complicate my state. They just don't want to see a 70 page document. So you will sometimes get that pushback from the clients themselves. But yeah, you have to wonder about this one because you're like it was especially to a spouse because you're like, you have the most amount amount of like, you know, at least, you know, deferral, but if not like actual mitigation and to not do any of it is Something. Sure. speaker-1: For crazy. Any other ones you want to hit on? speaker-0: similar vein was Philip Seymour Hoffman. he died with 34 million. He specifically, I think this one was intentional, but again, to just to sort of show you like what that push-pull is. He did not want to create what he called trust fund kids. So he left everything outright to the mother of his children. He was not married to her. so it because he wasn't married, it didn't qualify for any sort of marital deduction. It wasn't structured that way, it was just an outright gift. and then obviously we don't have like trust for descendants or any of those type of structures which could have allocated GST or things like that. So everything went to her, presumably for the care of their kids. but no I mean, they paid he full freight on that estate tax return for sure. speaker-1: Okay. Crazy. I think this was a really interesting episode. I think it was one that we really needed to do. I think there's a lot of core themes here, like update your estate plan, make sure it follows what you want, trusts have a lot of value. When you have a taxable estate, you know, estate tax planning makes a lot of sense. Save yourself in fees, make sure everything goes the way you want. And that's the whole point of estate planning. speaker-0: Hundred percent. Totally. speaker-1: Okay. Perfect. Well, Lisa, appreciate the time. Everybody, thanks for listening. please share with another advisor you think would benefit from learning from this podcast. And we'll see you back in a couple of weeks.