Who got the money? Who had the biggest family feuds? The mistakes that were made — and what we can learn from them. Two legal experts in estate planning and the authors of Trial & Heirs have the scoop.
If the recent and sudden death of Michael Jackson taught us something – other than the side effects of too much prescription medication – it’s the importance of a will or trust. Wills and trusts are taboo topics. We’re usually far more inclined to talk about Botox injections or mammograms than how we plan to divide our assets. But (and sorry for speaking so morbidly) once you’re dead, it’ll be far too late to finally address it. That’s why regardless of your age and health (Jackson was 50 and about to go on tour), it’s important to have a proper will — not just for your peace of mind, but for your family’s peace of mind too.
In addition to the King of Pop’s highly publicized estate battles, here’s a glimpse at more late celebrities, who cast a spotlight on the importance of pre-mortem planning. From Leona Helmsley (leaving $12 million to her dog) to former Senator Edward Kennedy (having a confidant as his administrator), here’s a look at how these celebrities divvied up their estates – plus the mistakes they made that you should want to avoid.
1. One of the more recent (and brutal) family fortune battles was started by billionaire Revlon Chairman Ronald Perelman. Who incurred Perelman’s wrath? Besides his ex-wife Ellen Barkin, his infirm, paralyzed and elderly ex-father-in-law, Robert Cohen. Perelman claimed Cohen had promised half his extensive fortune to Claudia Cohen, Perelman’s other ex-wife, who had passed away and whose estate Perelman controls. Despite clear instructions in Claudia’s will to preserve the relationship between their daughter and the Cohen family, Perelman launched a series of vicious lawsuits that pitted them against each other. Perelman has lost on every claim, but vows to appeal in spite of the millions in legal fees he has already spent from Claudia’s estate.
*Tip: The only reason Perelman could cause so much trouble was because Claudia Cohen named him as executor of her estate. Choose wisely when naming your executor or trustee or your family may literally pay the price!
2. Sen. Edward (Ted) Kennedy’s will provided the world a peek behind the curtain of the famed Kennedy family. It revealed that he created a living trust and directed that all of his assets pass into his trust. Who did he pick to administer his estate? Instead of choosing his second wife or any of his children, he chose a trusted family friend and confidant, Paul G. Kirk Jr. This is a classic second-marriage situation. Kennedy may have chosen Kirk because he wanted someone outside of the family to administrator the estate to avoid family friction.
*Tip: In second marriages or situations where there is likely to be family conflict, choosing a family friend or trusted adviser makes good sense. Proper estate planning involves taking precautions ahead of time to avoid a family fight down the road.
3. While there was little he could do to surprise anyone given his past eccentricities, whenMichael Jackson died suddenly, it caught the world off guard. The good news is that Jackson had a trust, the Michael Jackson Family Trust. A trust keeps affairs private and outside of the probate court — at least when it’s used properly. In Jackson’s case, however, he didn’t transfer his assets into the trust and as a result, his estate went through the very public court process. The general public learned about all of the fighting going on in Jackson’s estate as well as financial information, such as his mother’s monthly grooming expenses of $1,000 and his family’s monthly allowance of $86,000.
*Tip: A trust, unlike a will, can avoid the probate court process when used properly. By not transferring assets into your trust, however, you undermine some of the key benefits of a trust — privacy, avoiding probate court and decreasing the chances of a family fight.
4. Leona Helmsley chose to disinherit two of her grandchildren while leaving $12 million to Trouble, her well-named Maltese. Faced with these glaring inequities, Helmsley’s two excluded grandchildren filed a lawsuit claiming that she was not mentally fit or competent to create the will and trust. After battling it out in the probate court for seven months, the two grandchildren received $6 million plus legal fees. Poor Trouble had his inheritance reduced to a paltry $2 million. Hopefully, this would be enough for a secured home, well-paid guardian, grooming and a lifetime supply of dog bones.
*Tip: Family conflicts are not unusual when someone passes away, whether the estate is modest or grand. Good estate planning is the best prevention, but if you find yourself in the middle of a dispute, consider a settlement before the fight reaches absurd costs.
5. Unfortunately, the estate of Princess Diana was not handled with the same grace, dignity and class that she exuded in life. Diana left a “letter of wishes” asking her executors to “divide, at [their] discretion,” her personal property and give one quarter to her godchildren. Each godchild would have received property worth 100,000 pounds ($162,700). But Diana’s executors never did so. In fact, the executors convinced the court to disregard the “letter of wishes,” without even notifying the godchildren. Instead of 100,000 pounds, each godchild received only a single memento, such as an incomplete tea set, commercially available watercolor painting or, according to one godchild’s parent, a “grubby trinket.”
*Tip: Don’t undermine your will or trust by taking shortcuts. Ideally, your intent should be incorporated into your will or trust and not placed into a separate document. A separate personal property list can work, but giving the executors “discretion” to follow it means that your wishes may not be carried out.
6. Warren Burger wrote his own will consisting of a total of 176 words … for a $1.8 million estate. If you do the math, it’s $10,000 per word. The former Chief Justice of the United State Supreme Court could have used a few more words to avoid legal fees. His estate was forced to spend thousands of extra dollars in probate court because his will failed to give his co-executors the power they needed to sell real estate, pay taxes and otherwise manage the estate.
*Tip: Even if you are the former Chief Justice of the United States Supreme Court and wish to write your own will, at least have it reviewed by a legal expert. A “homemade” will is usually better than no will at all, but can have important provisions missing. By using a good estate planning attorney to prepare your will, later your family can save thousands of dollars in court costs.
By Danielle B. Mayoras and Andrew W. Mayoras. Originally published by The Women On The Web at WOWOWOW.COM