Six Celebrity Estate Planning Mistakes

One would think that with their access to money and advice, celebrities with large estates would avoid costly estate planning blunders.  Well, some do and some don't.  

1.  Poor Choice of Executor/Trustee:  Heiress Doris Duke chose her butler to manage her $1Billion foundation.  When he was accused of self-dealing, the foundation lost hundreds of thousands in litigation fees that should have instead benefited the charities named in the foundation.  Jerry Garcia made the same mistake, naming his third wife as his estate administrator.  This led to a protracted legal battle after his death.

2.  Poor Choice of Guardian:  Michael Jackson named his aging mother as the guardian of his three children, with Diana Ross as a backup.  What would happen if his mother were to die or lose capacity before the youngest of these children reached the age of majority?  They would either have to move across the country to live with Diana Ross - who isn't even related to them - or Diana Ross would have to resign, which would place the children at the mercy of  California guardianship proceedings.

3.  Doing Nothing:  What do Jimi Hendrix, Sonny Bono, Pablo Picasso, Bob Marley and Steve McNair all have in common?  They each died without a will, and in each case their estate was the subject of expensive, embarrassing and protracted litigation.  Even Abraham Lincoln (a lawyer!) died without a will.  Drafting estate planning documents takes some time and attention, but not so much that you should be afraid to tackle it.

4.  Leaving Unfinished Business:  Michael Jackson formed a trust, but never funded it.  This left a large portion of his estate subject to the very public probate arena.  "Funding a trust" simply  means assigning assets to the trust so the trust can govern the distribution of the assets.  Without funding, a trust won't work.  Check your life insurance policies, deeds and retirement plan statements for evidence that they are governed by your trust.  If you aren't sure, ask a lawyer.

5.  Not Updating with Important Life Events:  Heath Ledger and Michael Crichton neglected to update their documents following the birth of new children, leading to public family infighting.  Updates need to be made with every new marriage, divorce, birth, death and change of state residency.  A thorough review should be undertaken every three years.

6.  Disorganization:  Michael Jackson left assets scattered to the four winds.  Not only were they unassigned to his trust, but they had separate income streams and challenging valuations.  If you have a business, you need to gather information and organize it cleanly, so your family knows what they are dealing with.  Organization is not difficult, especially with the guidance of an estate planning professional.

Unfortunately, costly mistakes that turn families against one another and squander wealth on legal fees are not restricted to celebrity estates.  I've seen examples of nearly each one of these mistakes with ordinary people who have loving families.  Each mistake has cost the family money and good feelings.

If you'd like to make sure your estate plan is up to date and complete, come see me.  There's no fee for a first meeting, and never a bill until both you and I agree on the work to be done, and the appropriate fair, flat fee to see it completed.  You can learn more about me and my practice at Jamestown Estate Planning's website.