Celebrities are often a source of envy and aspiration, but they can also be an excellent example of what not to do. Several millionaires throughout history have dropped the ball when it comes to estate planning, leaving their heirs, fans, and business partners in a state of chaos and disarray. While the average person may not have an estate as complex as say, Michael Jackson, there are certainly lessons to be learned that anyone (with any sized estate) can benefit from in regards to proper estate planning and expert advice from probate or estate planning attorneys.
The Importance of a Will and Testament
Prince’s passing in April 2016 was shocking. At just 57 years old, the death of this industry legend was shocking and upsetting for both the late Prince’s family and fans alike. Unfortunately, since he did not leave a will, a Minnesota judge was left to determine how to divide Prince’s $300 million estate among his six siblings. There have also been reports of other potential successors, including a federal prisoner who claims to be Prince’s son. A common error is not drafting a will. Prince is not alone, though, according to Andrew Mayoras, a trust and estates attorney and co-author of Trial & Heirs: Famous Fortune Fights!, a book on famous estate disputes. “But it’s estimated that 60 percent to two-thirds of folks in America don’t have a last will and testament,” he adds.
Even if you have had a will drafted, making sure it’s updated is also incredibly important. Paul Walker was only 40 years old when he died in an automobile accident. Surprisingly, the actor did own a trust, a will, and assets worth about $25 million. Executing the estate took substantially longer owing to valuation issues because that plan had not been revised in about 12 years. Whitney Houston’s will was also outdated at the time of her passing, leaving her young daughter in a precarious financial situation.
Heath Ledger’s unfortunate passing at the age of 29 also led to numerous estate complications — despite having signed a will in his mid-20s, he had neglected to update it to include his then three-year-old daughter, leaving her disinherited. Fortunately, his family was able to help his child and work with lawyers to grant her access to some of the estate, but many aren’t so lucky. To avoid sticky situations like this, it’s best to review estate plans after major life events like marriages or births.
Howard Hughes, Nevada legend, aviator, and multi-billionaire industrialist, passed away with an estimated net worth of $2.5 billion. A handwritten will inexplicably appeared at a Mormon church in Salt Lake City a few days after his death. A bewildered gas station owner, who just so happened to be listed in the will as the beneficiary of $156 million, is said to have delivered the “Mormon Will,” as it was afterward known. The Nevada court ultimately came to the conclusion that the Mormon Will was a hoax, just as it had previously determined that numerous other wills that would surface in the ensuing years were also frauds. Officials concluded that Hughes did not create a will at all after conducting a thorough search. With so much money on the line, a legal dispute developed between the Howard Hughes Medical Institute and the estate’s temporary administrator (Howard’s cousin). The states of Nevada, California, and Texas, each of which asserted a claim to the estate’s distribution, were also involved in the court dispute.
Hughes’ estate was the subject of a protracted legal battle for years. Numerous marriages, a lady claiming to be his wife, and a number of people claiming to be Hughes’ long-lost children were all part of it. In the end, the Howard Hughes Medical Institute received a significant portion of the funds.
The Only Guarantees in Life are Death and Taxes
While having a trust and will, some celebrities fail to anticipate the tax burden that would fall on their loved ones after their passing. James Gandolfini of The Sopranos is an excellent example of this. Due to Gandolfini’s lack of proper planning, the federal estate tax will be applied to more than 80% of his assets. Federal estate taxes alone would amount to more than $20 million at a rate of 40% for all assets exceeding $5.25 million. The State of New York will then turn the tables, imposing a state estate tax of approximately 5% beginning after the first million dollars and increasing from there to 16 percent, to the degree the assets surpass approximately $10 million. However, when a person passes away and leaves assets to their spouse, the estate tax does not apply to such assets, so leaving more than 20% to his wife could have helped mitigate such massive losses, but that was sadly not the case. That means that the majority of his estate, unfortunately, had to be sold, and his family was left with next to nothing from his $70 million estate.
Dealing with Blended Families
Many celebrities have messy love lives – the public loves to watch from the outside, reveling at the complicated situations celebrities seem to always get themselves into. However, for the people involved, these complicated affairs can prove to be disastrous for estate planning, and regular Joes with blended families can certainly learn something from these estate fails.
The late Tom Petty passed away in 2017, and his estate has been on fire ever since. By bringing a lawsuit against Petty’s second wife and demanding $5 million in damages, Tom Petty’s children intensified the conflict over their late father’s fortune. Adria Petty and Annakim Violette, the plaintiffs in the complaint, contend that Dana York Petty, the widow of their late father, mismanaged the estate and so denied them the ability to control the manner in which Tom Petty’s music was made available.
Petty passed away at age 66 in 2017 from an unintentional drug overdose. Although the rules of the trust stipulate that the daughters will have “equal participation” in choices regarding the use of Petty’s catalog, he nominated Dana as the only trustee of the trust. The daughters from Petty’s first marriage assert that the conditions should be read to mean that they receive two votes out of three, which would give them a majority of one.
Even with proper planning, heated court battles frequently break out between heirs when famous musicians leave behind incredibly valuable—yet highly complex—assets like music rights. Resentment can also play a huge role in estate disputes, and in the case of a blended family like Tom Petty’s, it’s clear that even with some planning, disaster can strike at any time.
While you may not have the complex estates these celebrities had, there are many lessons to be learned so that you and your loved ones can carry on after a devastating loss. Preparing a will and trust (and regularly updating it) is one of the most important things you can do. It’s also important to speak with an estate attorney so that you can better navigate taxation and the legal responsibilities that come with an inheritance. At Kalicki Collier, we offer estate planning in Reno for individuals and businesses alike. Talk to a Reno estate lawyer today and set your family up for success no matter the circumstances.
Nevada law requires all estates valued at over $20,000 to pass through probate court, so hiring a probate lawyer is extremely important. No matter how much you think your estate is worth, it’s always important to have a well-planned will and testament written in case anything happens to you. This ensures that your loved ones will be cared for after your passing. It can also help minimize disputes after your passing, encourage better familial relationships, and ensure your legacy will live on. If you’re considering estate planning services in Reno, NV, call one of our expert attorneys at Kalicki Collier. We are here for you!