“The sad reality is that many of us have not taken the time to execute a will or develop an estate plan. The estates of individuals who die without properly drafted and executed wills are distributed in accordance with the law of the states in which they reside at death.”
The passing of celebrities used to focus solely on movies or television shows they brought to life, but these days, a lot of attention is paid to their deaths, as lessons in what not to do in estate planning. A few examples are offered in the article “Lessons in estate planning from the rich and famous” from Florida Today.
The deaths of Prince and Aretha Franklin illustrate the expensive disasters that occur when estate plans are incomplete or completely lacking. However, outdated estate plans, or estate plans that don’t recognize the differences between state laws can be equally problematic.
When Phillip Seymour Hoffman’s will was reviewed, there were two glaring issues. The will was prepared by a real estate attorney who had little knowledge of New York’s tax or estate planning laws. Second, the will was 10 years old. Mr. Hoffman had another child after the will had been prepared, so the child was not included in the will. The estate was rumored to be valued at around $35 million, with the entire estate left to his longtime partner and the mother of his children. The two had never married. Had proper planning been done, or if they had married, the family would not have lost a third to a half of the entire estate to taxes.
Ric Ocasek, lead singer for The Cars, died in the fall. For 30 years, he was married to supermodel Paulina Porizkova. The couple was separated at the time of his death. Ric had a new will created that said, “I have made no provision for my wife Paula Porizkova, as we are in the process of divorcing,” and “Even if I should die before our divorce is final…Paulina is not entitled to any elective share … because she has abandoned me.”
In New York State, this language may be enough to disinherit Paula. However, in Florida, it would not. Florida’s elective share provides a surviving spouse a mandatory minimum share of the deceased spouse’s estate, regardless of what the estate planning documents say.
While a person cannot completely disinherit a soon-to-be former spouse in Florida. If the divorce is not yet finalized, there are numerous planning opportunities to provide control over the distribution of assets. If it is done correctly, with the guidance of an experienced estate planning attorney, an elective share trust can be used to satisfy the elective rights of a spouse. The right to make the distributions of the rest of the assets is retained. This can be especially important, when there are children from a prior or subsequent marriage.
Working with an experienced estate planning attorney who understands the details of the laws in your state will save the family not only taxes, but the potential time and costs of litigation that results when estate plans are poorly prepared. You don’t have to be rich or famous to avoid estate planning mistakes.
Reference: Florida Today (Dec. 27, 2019) “Lessons in estate planning from the rich and famous”