What do Tom Petty, Aretha Franklin, Anthony Bourdain and Prince have in common? They were wealthy celebrities who never got around to proper estate planning. They are not alone. Planning for death and disability is not high on the list of priorities for many people. However, ignoring or avoiding or refusing to make decisions about the inevitable, results in added stress for your loved ones at best, and litigation, family conflict and loss of significant wealth at worst. Regardless of how much wealth you have, there are valuable lessons you can learn from celebrity mistakes.
Not writing a will. Prince died without leaving a will, which means that what happens to his wealth and legacy is decided by state law, not his wishes. A will enables you to direct who you want to inherit and what they will get. You can also name an executor to handle distribution of your estate, payment of debts, etc. Proper estate planning may also minimize taxes. Without having Prince’s vast catalog of songs—both released and unpublished—properly valued by a firm that specializes in such matters, it will be the government that ultimately decides the value, which could lead to much higher taxes for Prince’s estate.
Need for experienced legal advice. It may seem like any attorney can write a will or trust, but expertise matters. Tom Petty set up a trust directing his second wife as trustee to establish an entity to be used to hold and control Petty’s music catalog. This arrangement did not sit well with Petty’s daughters from a prior marriage. Unfortunately, the trust language regarding control over the entity was not clear and is being litigated.
Executing documents properly. In an era where you can find anything online, some people may think they can just read an article or download a form and take care of their own will. However, as demonstrated by Aretha Franklin’s death, the result can be a disaster. Her 4 sons are arguing over the validity of 3 handwritten wills found in her home, which may mean years of expensive litigation.
Special provisions for heirs. Franklin’s 3 wills made specific provisions for her oldest son, who reportedly has special needs. Parents in similar situations have unique estate planning issues which must be addressed with an attorney and discussed with a financial planner. The same may hold true if you have an heir with financial problems and want to limit their access and protect the inheritance from creditors.
Addressing separation and divorce. Anthony Bourdain was separated from his wife at the time of his death. Since the divorce was not final, she would be entitled to a spousal share of the estate. If you are in process of divorcing or recently divorced, talk to an attorney and financial advisor about making changes to your estate plan and beneficiary designations.
I don’t think these celebrities would be happy knowing the problems they left behind. Document your wishes and save your loved ones the headache of dealing with your estate.