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Some Common Estate Planning Mistakes (Made by Celebrities) That Are Best Avoided

What might happen if you have the talent for success, but not the talent for business?

As can often be the case, many extremely talented people accumulate large estates and they often are not prepared to take on the task of organizing the transfer of assets, according to the Reno Gazette Journal in “Yes, even celebrities make estate planning mistakes.”

Here are the top four biggest mistakes:

No Will. The biggest names who had no Will: Prince, Aretha, Amy Winehouse, and that is just a few. Winehouse left an unwritten song about her finances, but she also left a $6.7 million estate. She had a brother and an ex-husband, but no direction as to who should get what. Without a Will, her estate was distributed to her parents. You need to have a Will to ensure that your assets are distributed according to your wishes.  Having no Will also often leads to some kind of litigation, costing the surviving family a lot of money.

Not setting up a Trust. Celebs want their glamorous red-carpet photos all over Instagram and Facebook, but that does not mean they want their personal finances to become public record. A Will is a public document, but a Living Trust keeps things private. There was more than one tragedy that followed Whitney Houston’s death. Her Will named Bobbi Kristina Brown as her sole beneficiary. However, her daughter died three years later. Then her estate was tangled up with an IRS battle over the valuation of recording royalties. The bill from the IRS: $2.2 million in additional taxes. Her ex, Bobby Brown, may yet end up the heir of the Houston estate, and that was probably not what Whitney wanted.  Not only would a Trust have kept her finances private, but it would have addressed how to distribute her Estate after her daughter’s death.

Not keeping the plan up to date. Life is all about change.  Everything changes - financial conditions, health, family relationships, divorce, marriage, birth, adoptions and estrangements. The world-famous author Michael Crichton, author of Jurassic Park and many other best-sellers, was diagnosed with throat cancer when his sixth wife was pregnant. His Will was not updated. She had to sue to include their new baby as an heir, and a daughter from a prior marriage opposed it. The Court ultimately ruled that the baby should inherit; however, simply updating his Will would have resolved everything without the additional litigation costs, stress and rancor.

Ignoring the Potential for Disability before Death. Estate planning is also for the living. You may be disabled and need help in managing your financial affairs. One out of 10 people over age 65 are diagnosed with Alzheimer’s disease, then at age 85, the rate skyrockets to one out of three. One celebrity whose dementia led to a nasty family rift was Etta James, the blues singer best known for the classic “At Last.” She had a signed Power of Attorney over to a son from a prior marriage in 2008. Her husband of more than 40 years said that she was already suffering from dementia and was not competent to sign any legal documents at the time. The son wanted to limit the amount of money the singer’s husband spent on her medical care. They finally settled, and her husband was named as her Conservator. However, he was given a limit of $350,000 for the care for his wife. Etta James passed away shortly thereafter.

Celebrities are not the only ones who make enormous mistakes when it comes to estate planning. However, they are the ones that we read about.

An experienced estate planning attorney can advise you on creating an estate plan that fits your unique circumstances, and can help you avoid those costly mistakes.

Reference: Reno Gazette Journal (Nov. 14, 2018) “Yes, even celebrities make estate planning mistakes”

Properly Implementing Transfers of Assets Requires Accurate Coordination

In New Jersey, there are many ways to transfer assets upon your death, but achieving your goals can be more challenging than most people realize.

An estate plan can be rendered ineffectual if the different ways that assets can be distributed contradict with one another.

A recent example of a common problem was discussed in the NWI Times.  The story began with the creation of instructions in a Will that the contents of a bank account should be divided between the Decedent’s three children.  However, that provision could be overridden if that bank account says it should be “payable on death” (POD) to only one of the children, according to the NWI Times in "Estate Planning: Catching up on reader's questions."

This conflict arises more often than one would think.  When people open bank accounts, they often make them payable on death at the bank's suggestion.  Unfortunately, the bank’s representative usually does not have the time or the knowledge to ask the person whether such a designation is consistent with the person’s estate plan.  Moreover, after consulting with an experienced estate planning attorney, the person ultimately wants to do something different with the account when they create their Will, and that leads to conflicts and problems. The beneficiary who gets the bank account through the payable on death designation is under no legal obligation to heed the wishes stated in the Decedent’s Will.

Proper coordination of the title to one’s assets is an integral part of any estate plan, and an experienced estate planning attorney can conduct a periodic review of your estate plan in order to avoid any such conflicts.

Reference: NWI Times (May 27, 2018) "Estate Planning: Catching up on reader's questions."

Changes in Life Usually Require Changes to Your Estate Plan

As life goes on, it may be wise to set up some review time for your estate plan.

There are a few common things that can happen in your life that have an impact on your estate plan, according to the Huntsville Item in "When should you review your will?"   

In a nutshell, your Will and other estate planning documents should be reviewed and updated whenever you have had a meaningful change of circumstances in your life.  Among other circumstance, people should review their Will and other estate planning documents whenever they have had a meaningful change to the composition or size of their assets, and/or whenever they have had any other significant change of circumstances which has affected their lives.  Most people have had a sufficient “change of circumstances” in their life at least every 5 years to warrant a review of their existing estate plan. 

One way you can avoid having to think about when to review your estate plan is to just go ahead and review it every few years.

If your estate plan no longer accomplishes what you want, an experienced estate planning attorney can advise you on what revisions to make.

Reference: The Huntsville Item (May 7, 2018) "When should you review your will?"

Consider the Options for Leaving a Legacy

Flexibility can lead to the creation of a better legacy than anticipated.

When people go to an estate planning attorney, they sometimes already have a good idea regarding what they want to accomplish with their estate plans. That is often a good thing.  If a person is flexible and willing to consider options, however, it is possible to leave a good estate plan that benefits themselves as well as their families, according to Financial Advisor in "All You Can't Leave Behind."

When people are willing to consider different methods of distributing their estate, they have an opportunity to change their legacy.  A legacy is more than what people give to others in their estate - it is also how others remember them.

Different methods of estate planning can change how people are remembered.  Even something as simple as using a trust can create the opportunity for a much different legacy. Trusts can be constructed with all types of different legacy changing provisions.

If you have an open mind, it is possible a meeting with your estate planning attorney can result in protecting your assets for your beneficiaries and creating an estate plan that fits your unique circumstances.

Reference: Financial Advisor (May 1, 2018) "All You Can't Leave Behind."

Estate Planning Does Not Have to Be A Painful Process

There are many false impressions out there about creating an estate plan.  However, estate planning does not have to be a painful process, according to The New York Times in "What It Was Like To Finally Write My Will."

The author of the piece discovered that creating an estate plan was not very difficult at all. The key thing that he did was to get a recommendation for a qualified estate planning attorney from a friend.  He then went to that attorney and told the attorney what he wanted to do.

The attorney discussed the author’s options and the author was able to work with the attorney to determine what the best course of action would be for his unique circumstances. The attorney then implemented the plan and the author just needed to go back to the attorney's office a few weeks later to sign his estate planning documents.

Carefully choosing an experienced estate planning attorney often makes the estate planning process go smoothly.

Reference: New York Times (April 3, 2018) "What It Was Like To Finally Write My Will."

Wills and Estate Plans Should Be Reviewed In Light Of Recent Tax Law Changes

A Will written many years ago may not fit with your current circumstances or the current tax laws.

Whether an estate plan is a good one depends on whether it properly coordinates your personal circumstances with applicable laws, which have been changing frequently in recent years, so it is a good idea to take a fresh look at your estate plan, according to the Dunwoody Crier in "Estate Planning 2018."

Estate planning is extremely sensitive to tax laws and regulations that have been changed frequently in the last decade.  When an estate planning attorney helps a client create a plan, the attorney should draft a plan that is the best one possible to address the client’s circumstances and accomplish the client's goals under the current laws.  However, when circumstances and laws change, it means that previous estate plans are probably no longer the best way to do things.   In fact, sometimes techniques that were common and appropriate in the past may be penalized by current laws.

What that means for estate planning is that your Will is a time sensitive document.  When your Will was written, it was prepared under the assumption that you would pass away before your circumstances, or applicable laws, changed in a meaningful way.  

An experienced estate planning attorney can advise you if your estate planning documents fit your current circumstances, including current laws.

Reference: Dunwoody Crier (March 27, 2018) "Estate Planning 2018."

Yes, Everyone Needs a Will

There are so many reasons why people need an estate plan, which almost always includes a Will, that in all likelihood everyone needs one, according to The Bellingham Herald in "Here are seven reasons you want to protect your family with a last will and testament."

The reasons why you may need a Will include:

• Without a Will, you have no say in who inherits your property. Everything is determined by state laws of intestate succession.
• No Will also means you do not get to decide who manages your estate after you pass away. The court will appoint someone to do so and it may not be the same person you would have chosen.
• If you have minor children, then without a Will you will not be able to nominate their guardian. If you do not have a will, then the court appoints someone who might not be the same person you would have wanted.
• For various reasons, distributing your property through joint ownerships and TOD registrations are often not the best approach, and frequently leads to a distortion of your intentions.
• Without a Will, it is impossible to plan for the impact of potential taxes on your estate.
• Wills generally make going through probate and the estate administration process much faster than without one.
• If you want to leave anything behind for charity, then you need a Will to do that.

While you are visiting an estate planning attorney to obtain a Will, the attorney might suggest additional estate planning techniques and instruments, such as various trusts.  You will not know what options are right for you unless you go to an experienced estate planning attorney.

If you believe you do not need a Will, you should probably should go visit with an estate planning attorney and find out for sure.

Reference: The Bellingham Herald (March 22, 2018) "Here are seven reasons you want to protect your family with a last will and testament."

Choosing Your Child as Your Executor May Not Be The Best Choice

When considering an Executor, many people will trust one of their own children above all other potential candidates.  However, it is not always a good idea to choose one of your children as your Executor, according to Texas Lawyer in "Mamas, Don't Let Your Babies Grow Up to be Executors."

Being an executor is not an easy job.  An executor does more than just distribute the assets of an estate.  Among other things, an Executor must be able to communicate with the Court and with any heirs about the estate.  If, for example, the executor and a sibling do not get along, there can be problems.  In some cases, executors will need to invest assets for a period of time before they can be distributed, and the executor need to do that investing wisely.  Moreover, an Executor should be financially knowledgeable and not prone to emotional decision-making.

Before naming one of your children to be the executor of your estate, think through whether it is a role for which that child is suited.  It might be better, in some cases, to name a professional.

An experienced estate planning attorney can advise you in creating an estate plan that fits your unique circumstances, including choosing the most appropriate candidate for the job of your Executor.

Reference: Texas Lawyer (March 6, 2018) "Mamas, Don't Let Your Babies Grow Up to be Executors."

Digital Wills Present A Legal Challenge

While many digital legal documents have already been created, it seems that digital Wills create a real legal challenge.

Despite the recent move to create digital legal documents, Wills (which by the very nature of the deceased being unable to verify the document in court) have remained on the back burner.  Perhaps, however, that is about to change, according to the New York Law Journal in "Wills in the Digital Age."

The first thing that must be figured out is what counts as a digital signature for the purposes of a Will. Digital signatures are allowed for things like contracts and taxes.  However, the signer of those documents can be asked if anyone needs to question whether the signature is valid.  That is not possible for a Will, so it is likely witnesses will still be necessary.  That leads to the question as to what constitutes witnessing a digital signature. If signing is the click of a button, must the witnesses just be present to see the button clicked?  Finally, it will need to be determined how the digital Wills should be stored to make sure they are not edited after the fact.

As technology moves forward, it is expected that States will find different acceptable solutions.

Reference: New York Law Journal (March 6, 2018) "Wills in the Digital Age."

The Author of “To Kill a Mockingbird” Maintains Her Privacy With A Trust

The author of “To Kill a Mockingbird” was quickly put into the limelight, but she quickly stepped out of it and has remained out.

When Harper Lee, the author of To Kill a Mockingbird, died in 2016, there was considerable publicity as writers attempted to uncover all the details of her life.  However, they met with little success.  Lee’s Last Will has been unsealed, but it does not reveal very much, according to Al.com in "Harper Lee's will is unsealed but questions about the legend of American literature remain."

Lee's Last Will directs that all of her assets, including her literary property, be put into a previously created Trust.  Details about the Trust are not part of the public record and remain private.  And there does not appear to be a way to make them public.  The Trust's beneficiaries and the Trustee are not known.

What Lee created is known as a Pour-Over Will, which simply transfers assets to a pre-established Trust after someone passes away. Since Trusts do not have to go through probate and are private, this is a great method to use for people who do not want the details of their estates known to the public.

An estate planning attorney can advise you in creating an estate plan that meets your unique circumstances, which may include a privacy issue.

Reference: Al.com (Feb. 27, 2018) "Harper Lee's will is unsealed but questions about the legend of American literature remain."