Whether it’s fear of thinking about the end of life or they just don’t believe they have enough money and assets to worry about, only 33% of American adults have an end-of-life plan that describes how their funds and possessions should be distributed after their death. Although, as U.S. adults age, the average increases to 76% of those 65 and older; however, it is estimated that only 20% of those under age 30 have made the necessary arrangements of obtaining a will.
This problematic mindset is even evident among some of America’s most well-known, richest celebrities. Although we admire them for their contributions to culture, amassed wealth, or ability to entertain, these celeb estate planning nightmares should be a warning to take the necessary steps to protect your money, assets, and loved ones. Here are just a few celebrity mistakes to avoid when making your estate plans.
Mistake #1: Not Having a Will
When Black Panther star Chadwick Boseman lost his four-year battle with colon cancer in October of 2020, the 43-year-old actor’s lack of a will left his wife fighting for limited administrative authority of the nearly $939,000 estimated estate value with the probate court. When you don’t have a plan in place, your state provides one for you. In the State of Florida, those who have died intestate, meaning without a will, a familial heir must obtain a “Letter of Administration,” or the court will appoint a relative as the personal representative or executor, which may not be the individual you had in mind, or be someone who does not hold the best interest of your estate. In Boseman’s case, named beneficiaries on 401Ks or life insurance policies received their inheritance, but his wife was left with the headache of gaining controlling interest in the assets that would traditionally be listed in a will.
Mistake #2: Not Having a Power of Attorney Before It’s Too Late
Blues singer Etta James left her mark on the world with world-renown hits like “At Last,” “All I Could Do Was Cry,” and “Something’s Got a Hold on Me.” Yet, James’ legacy of not having a power of attorney is a warning we should all heed. After James was diagnosed with Alzheimer’s in 2008, she appointed her son, Donto James, as her executor instead of her husband of over 40 years, Artis Mills. Mills questioned James’ mental capacity and argued she was already declining when the decision was made. This led to disagreements about the control of her $16 million dollar estate and where and how much money should be spent on James’ care. What we can learn from James is to always make a power of attorney when planning your estate. Creating a durable power of attorney gives an individual of your choosing the power to manage your legal and financial affairs in the event that you become incapacitated or physically unable to make these decisions for yourself; whereas, a medical power of attorney, or in Florida, a “Designation of Health Care Surrogate,” enables an individual to make important decisions about your medical care such as treatment options, medication, surgery, and end-of-life care.
Mistake #3: Not Updating Beneficiaries
When actor Heath Ledger died unexpectedly in January 2008, his will was outdated, listing his parents and three sisters as beneficiaries. His will, written three years prior to this death, did not include his daughter, Matilda Rose, with long-term partner Michelle Williams. Fortunately, Ledger’s family arranged for his entire estate to go to a trust set up for Matilda’s benefit. However, this feel-good story could have ended very differently. Because Ledger did not actively add Matilda as a beneficiary, his family could have easily left her with nothing because they were not legally obligated to do so. Make it a habit to evaluate your estate plan on an annual basis to ensure all beneficiaries and the power of attorney are updated. Or you may opt to set up a flexible estate plan that will fit your lifestyle with minimal amendments.
Mistake #4: Not Actually Placing Your Assets in a Living Trust or Failure to Fund a Revocable Trust
Michael Jackson’s death shocked the entire world. His legacy as the King of Pop lives on through his iconic music, brand, and children. After public custody battles, establishing will credibility, probate court battles, and a slew of tax and debt issues, it’s evident Jackson needed to do more to protect his beneficiaries. Although he created the Michael Jackson Family Trust, he neglected to fully fund the trust, and an over-decade-long battle ensued with resolutions just recently coming to fruition. Jackson’s children– Prince, Paris, and Blanket– are each set to receive $33 million, with allowances until they are 21 and the ability to access one-third of their trust once they turned 30. They will receive another third at 35 and the rest at 40. Although it seems like he set his children up for life, there are several things he should have done differently. Jackson should have been advised to use a living trust – “a legal arrangement established by an individual (the grantor) during their lifetime to protect their assets and direct their distribution after the grantor's death.” By using a living trust, Jackson would have avoided a very public, lengthy, and costly estate battle, as his estate would have been protected and his private life kept private. Jackson’s second mistake was not protecting his children’s interests in the long run by setting up a lifetime asset protection trust. Right now, once his children have access to the entire trust, those funds are no longer protected from bankruptcy, divorce, or lawsuits. Utilizing an asset protection trust would have given his children allowances from their trust funds to pay for living expenses and any major life decisions like buying a home or starting a business without the fear of losing it all in the case of a failed marriage, budgeting mistakes, or legal issues.
Mistake #5: Choosing an Executor, Trustee, or Guardian You Can Trust
Tobacco heiress Doris Duke held an estimated net worth of $1.3 billion at her death. Her family, the namesake of Duke University and Duke Energy, carries a legacy of successful business ventures and philanthropic work that generated substantial wealth and created lasting social and political connections. Her father, James Buchanan Duke, died October 10, 1925, when Doris was only 12, inheriting his estate. Despite being young, Duke set up a trust and will, eventually naming her butler, Bernard Lafferty, executor of her 1.2 billion dollar estate; although, there were allegations that Lafferty coerced the physically aging and mentally weak Duke into giving him control of the estate and used morphine to hasten her death. The lesson we can learn from Doris Duke is that you must choose an executor, trustee, or guardian you can trust wholeheartedly to carry out your wishes. Duke’s situation could have quickly gone awry with her butler running off with billions of dollars. If you cannot find an executor, you can name your attorney, certified financial planner, trust company, or local financial institution to carry out your will.
Estate planning isn’t just for celebrities and their heirs and heiresses– it’s for people just like you. It doesn’t matter if you have millions or just a few thousand dollars, having an estate plan will guarantee that your financial and medical decisions can be made by someone you trust. With Crews Bank & Trust, our Trust and Investment Management Services helps you find ways to plan for your financial well-being so that you and your loved ones are provided for in the best possible way.
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