Celebrity Estate Planning Mistakes
When celebrities pass away, their estate planning mistakes become public knowledge. While the scale of their wealth may be far beyond what most of us will ever accumulate, the mistakes they make are surprisingly common and serve as cautionary tales for everyone. Here are some of the most notable celebrity estate planning failures and what we can learn from them.
James Gandolfini: A Massive Tax Bill
James Gandolfini, the beloved star of The Sopranos, passed away in 2013 with an estate valued at approximately $70 million. His will left only 20 percent of his estate to his wife and the remainder to other family members, including his sisters and his infant daughter from a second marriage.
The problem was that assets left to a spouse are exempt from federal estate tax under the unlimited marital deduction, but assets left to other family members are not. Because Gandolfini directed 80 percent of his estate to non-spouse beneficiaries, approximately 55 percent of that portion was consumed by estate taxes. The total tax bill was estimated at nearly $30 million.
With proper planning, including the use of trusts and the marital deduction, a significant portion of that tax burden could have been avoided. Gandolfini’s case is a stark reminder that how you structure your estate plan matters as much as what your plan says.
James Brown: Ambiguous Language and Endless Litigation
James Brown, the “Godfather of Soul,” passed away in 2006. His estate plan included a trust that was intended to fund scholarships for children in need. However, the language in his trust was ambiguous, and multiple parties challenged the distribution of his assets.
What followed was more than six years of litigation involving Brown’s former partner, his children, and the trust’s intended charitable beneficiaries. The legal fees consumed a significant portion of the estate, and the charitable mission Brown envisioned was delayed for years.
The lesson from James Brown’s estate is clear: ambiguous language in estate planning documents is an invitation to litigation. Every provision in your will or trust should be drafted with precision, and your attorney should anticipate potential challenges and address them proactively.
Michael Jackson: The Unfunded Trust
Michael Jackson created a trust during his lifetime, which is generally an excellent estate planning strategy. However, Jackson reportedly never transferred his assets into the trust. When he passed away in 2009, his assets were not controlled by the trust and instead had to go through probate.
An unfunded trust is one of the most common estate planning mistakes, and it is not limited to celebrities. Many people go through the effort and expense of creating a trust but fail to take the critical final step of re-titling their assets in the name of the trust. A trust only controls assets that are titled in its name. If you create a trust but never fund it, your assets will pass through probate just as if the trust did not exist.
The takeaway is simple: if you have a trust, make sure it is properly funded. Work with your estate planning attorney to ensure all appropriate assets are titled in the name of your trust.
Howard Hughes: No Will, No Plan
Howard Hughes, the legendary aviator, filmmaker, and business magnate, passed away in 1976 with an estate valued at approximately $2.5 billion. Despite his enormous wealth and business sophistication, Hughes died without a valid will.
The result was a legal battle that lasted for years. Multiple wills surfaced, but none were authenticated. Ultimately, his estate was divided among 22 cousins, many of whom Hughes had never met. The people and causes Hughes cared about most during his lifetime received nothing.
Hughes’s case illustrates the most fundamental estate planning mistake of all: failing to have a plan. Without a will or trust, the state decides who gets your assets, and the result is often very different from what you would have wanted.
Michael Crichton: The Posthumous Child Problem
Michael Crichton, the best-selling author of Jurassic Park and many other novels, passed away in 2008. At the time of his death, his wife was pregnant with their son, who was born after Crichton’s death.
Crichton’s estate plan reportedly did not account for the possibility of a posthumous child. His will left the bulk of his estate to other beneficiaries, and his son born after his death was potentially excluded from the inheritance. This led to legal disputes and highlighted the importance of including provisions for after-born or posthumous children in your estate plan.
If you are of childbearing age, or your spouse or partner is, your estate plan should include language that accounts for children who may be born after the plan is executed, including after your death. This is a simple provision that can prevent significant legal complications.
Doris Duke: A Mismanaged Foundation
Doris Duke, the tobacco heiress, passed away in 1993 with an estate valued at approximately $1.2 billion. She left the bulk of her estate to a charitable foundation, which was intended to support medical research, the prevention of cruelty to children and animals, and other causes she cared about.
However, the foundation was mismanaged by its initial trustees, who spent lavishly on themselves and made questionable financial decisions. The estate was the subject of lawsuits and investigations, and the charitable mission Duke envisioned was compromised by the very people she trusted to carry it out.
Duke’s case highlights the critical importance of choosing the right people to manage your estate and including appropriate oversight provisions. If you are creating a trust or foundation, consider including provisions for trustee accountability, successor trustees, and mechanisms for removing trustees who do not act in the best interests of the beneficiaries.
Casey Kasem: A Family Torn Apart
Casey Kasem, the legendary radio host known for American Top 40, suffered from Lewy body dementia in his later years. His case became a public spectacle when his children from a prior marriage and his second wife engaged in a bitter fight over his care and his estate.
The disputes escalated to shocking levels. His children accused his wife of isolating Kasem from his family, and his wife accused the children of interfering. Kasem was reportedly taken across state lines and even out of the country during the disputes. After his death in 2014, the fighting continued over his remains, with allegations of kidnapping and even corpse theft.
Kasem’s case is a tragic illustration of what happens when family dynamics are not addressed in an estate plan. If you have a blended family or anticipate potential conflicts between family members, it is essential to address these issues in your plan, including detailed instructions for your care in the event of incapacity.
Prince: No Will at All
When Prince passed away in 2016, he left behind an estate estimated at $200 million and, remarkably, no will at all. Despite his enormous success and access to the best legal and financial advisors in the world, Prince never executed a basic estate plan.
The result was years of litigation, enormous legal fees, and a windfall for the IRS. Without a will, his estate was distributed according to Minnesota’s intestacy laws, and the fight over his assets and intellectual property involved multiple claimants and dragged on for years.
Prince’s case is perhaps the most famous modern example of the consequences of dying without a will. It does not matter how wealthy or successful you are; without an estate plan, you have no say in what happens to your assets or your legacy.
Aretha Franklin: The Handwritten Will Problem
Aretha Franklin, the “Queen of Soul,” passed away in 2018. Initially, it was believed that she had died without a will, which would have meant her estate would be divided according to Michigan’s intestacy laws.
However, months after her death, handwritten wills were discovered under a couch cushion and in a locked cabinet in her home. The discovery of these documents, known as holographic wills, created more problems than they solved. The multiple handwritten wills contained conflicting provisions, and their validity was disputed. The family was thrown into litigation over which, if any, of the handwritten wills should be honored.
Franklin’s case teaches two lessons. First, have a professionally drafted estate plan rather than relying on handwritten documents. Second, if you do have prior wills, make sure they are properly revoked when you create a new plan. Conflicting documents create confusion and invite litigation.
The celebrities on this list had access to the best attorneys, accountants, and financial advisors money could buy. Yet they still made basic estate planning mistakes that cost their families millions of dollars and years of heartache. If it can happen to them, it can happen to anyone.
The good news is that these mistakes are avoidable. A comprehensive, well-drafted estate plan that is regularly reviewed and updated can protect your family from the kinds of problems that made headlines in these cases.
Contact our office today to make sure your estate plan is in order and your family is protected.
