If a person dies without a valid last will and testament, the decedent is said to have died “intestate,” and his or her property will be distributed in accordance with the New York State Statute on descent and distribution. If a person has an estate plan but it fails to reflect his current wishes, then the wrong people may inherit the assets. Whether it is an out-of-date plan or no plan at all, loved ones may be faced with stress or conflict dealing with unintended beneficiaries. Up-to-date estate plans are important because they distribute assets based on the current wishes of the individual, rather than the state, default or outdated planning documents. Estate planning mishaps occur not only to average individuals, but to celebrities as well.
This year, the death of famous musician Prince resulted in a huge estate planning mishap because he failed to have an estate plan. Although his siblings were granted large sums of money, Prince’s failure to have an estate plan left them considerably more than he may have intended. Further, a large amount of money went to attorneys and the United States Government. Prince, who was known throughout his lifetime for his philanthropic efforts, may have wanted to designate at least a portion of his assets to the multiple charities he supported throughout his lifetime.
As mentioned, an additional common estate planning mistake is the failure to update and take into account a beneficiary’s maturity and life situation. Another famous celebrity, Whitney Houston, never updated her estate plan after the birth of her daughter, Bobbi Kristina Brown. Ms. Houston had a will and trust established for Ms. Brown, which accumulated over $20 million dollars. Ms. Brown was allowed 10 percent of her fortune at age 21, which was 2 million dollars. However, Ms. Houston failed to take into account whether or not her daughter would be capable of managing such a large sum of money. For instance, Ms. Houston could have had a trusted advisor manage Ms. Brown’s money. This advisor could have allocated a reasonable amount of funds for living expenses and luxury items on a monthly basis. This prevents a young person, who may not be well equipped to manage finances on their own, from over-exhausting their resources in a short time frame.
Also, if a trust is utilized, individuals should re-title their assets in the name of the trust. Michael Jackson, a music icon, failed to put a large number of his assets into his trust. Trusts can help to protect assets, avoid probate, and provide direction for distribution. For a trust to work, it must be funded by having the assets retitled in the name of the trust. In Mr. Jackson’s case, he failed to fund the trust. Due to this, Mr. Jackson’s beneficiaries had to go in and out of probate court on numerous occasions. While probate court may not be completely avoided, funding the trust can alleviate the likelihood of litigation, time, and legal fees and help maintain privacy.
When creating an estate plan, you should always provide for the possibility of new heirs, such as children or grandchildren. Famous celebrity actor, Heath Ledger died in 2008. Mr. Ledger had a will but it failed to account for the possibility of having children. His entire estate worth, $20 million dollars was left to his parents and three sisters. It did not include his daughter. Whether or not one has children at the time they create their estate plan, a good will or trust should provide for the possibility of children born in the future. Fortunately for Mr. Ledger’s daughter, her grandparents put the majority of Mr. Ledger’s assets into a trust for his daughter. This may not always be the case.
Always make sure an estate plan is kept in a safe place and a loved one knows how to access it after your death. Florence Griffith Joyner, an Olympic track and field gold medalist, had a will but never told anyone where it was. Due to the failure to locate the original estate planning documents, Ms. Joyner’s family was engaged in costly litigation with one another for four years before they could agree on a settlement and distribution of her assets.
At Tully Law, PC, we understand that estate planning can be both emotional and overwhelming. Our attorneys are available to advise you on complex estate planning issues so as to minimize the possibility of these types of problems. We will take the time to review your goals and circumstances and do our best to ensure that your assets are protected and your wishes will be carried out as per your estate plan. For more information regarding our services or to schedule a consultation, call (631) 424-2800.