Compass Newsletter - Articles

Estates of the Rich and Famous:
Ten Lessons Learned from Celebrities Who Got It Wrong

By Deborah R. Lush
(Summer 2012)

This article reviews some of the notorious mistakes of celebrities with regard to estate planning (or lack thereof), and the lessons gleaned from their stories.

  • Mistake #1: Procrastinating

    Celebrity: Pablo Picasso

    When Pablo Picasso died in 1973 at the age of 91, he left behind a fortune, including artwork, five homes, gold, and other investments – but no will. His estate, which was divided among six heirs, took nearly six years to settle and cost $30 million.

    Lesson: Do a will, regardless of your age or size of estate.

  • Mistake #2: Do-it-yourself

    Celebrity: U.S. Supreme Court Chief Justice Warren Burger

    Chief Justice Burger died in 1995 with a $1.8 million estate and a will of only 176 words that he typed up himself. The brevity of his will cost his estate $450,000 in estate taxes that could have been minimized with additional, technical provisions.

    Lesson: Hire a professional estate planning attorney to write the estate plan.

  • Mistake #3: Not Funding the Trust

    Celebrity: Michael Jackson

    Michael Jackson created a revocable living trust, which would have avoided probate and kept his estate private, but he failed to transfer all of his assets to it. The administration of the assets outside of his trust led to a fight in the probate court on public record.

    Lesson: Transfer all assets subject to probate to a revocable living trust to avoid probate and ensure the private administration of the estate (in addition to other benefits).

  • Mistake #4: Choosing Inappropriate Guardians

    Celebrity: Michael Jackson

    Michael Jackson named his mother guardian of his three young children. While few doubt his mother’s love for her grandchildren, some question whether Mr. Jackson’s aging mother will continue to be able to care for the children as long as the children will need it. If not, the children will need to move across the country with Diana Ross, requiring a significant adjustment.

    Lesson: Whenever possible, choose a guardian (and backups) who most likely will be able to care for the children until adulthood.

  • Mistake #5: Failing to Update

    Celebrity: Heath Ledger

    Heath Ledger died in 2008 with a will that left everything to his sister and his parents, unintentionally disinheriting his wife Michelle Williams, and young daughter, Matilda Rose.

    Lesson: Update the estate plan regularly, especially after marriage, divorce, retirement, and the birth or death of a child. In Oregon, marriage revokes any prior will and divorce revokes it partially.

  • Mistake #6: Failure to Plan for Financial Disability

    Celebrity: Britney Spears

    Britney Spears, who is the only celebrity in this list still living, illustrates the problems that arise not on death, but at the advent of disability. With no disability plan in place, a legal proceeding was instituted to appoint her father as conservator for her multi-million dollar estate after a series of hospitalizations and erratic behavior in 2008. The court requirements (and costs) of a conservatorship will last as long as her legal incompetence continues. These costs may have been avoided with a living trust and a durable power of attorney.

    Lesson: Include a plan for financial disability, which can occur at any age.

  • Mistake #7: Leaving your Intent Unclear

    Celebrity: Whitney Houston’s father, John Houston

    When John Houston died, he left a $1 million life insurance policy payable to Whitney. Whether he intended that the policy be used to offset the $700k Whitney loaned him when he built his house in New England was unclear. Whitney and John’s surviving spouse, Barbara Houston, went through a lengthy, expensive legal battle that could have been avoided if John’s estate plan had properly addressed whether he intended the life insurance be used to repay the debt. The battle was resolved just weeks before Whitney’s death this year.

    Lesson: Make your intent clear in your estate plan, particularly as to intra-family transfers (was it a gift? a loan? an advancement of the child’s inheritance?)

  • Mistake #8: Making Oral Promises

    Celebrity: Marlon Brando

    Actor Marlon Brando allegedly orally promised his housekeeper his home and continued employment for her lifetime, which led to two lawsuits after Mr. Brando’s death.

    Lesson: Put it in writing. In addition, each state has specific requirements for signing a will. Oregon requires two uninterested witnesses.

  • Mistake #9: Untrustworthy Executor and Trustee

    Celebrity: Doris Duke

    The American Tobacco Company heiress died in 1993, leaving an estimated $1.2 billion estate. She named her butler, who lacked formal education and was semi-illiterate, as executor of her estate and trustee of a significant charitable foundation. When he used assets for his personal benefit, an expensive fight in court ensued that dearly cost the charities that Ms. Duke hoped to benefit.

    Lesson: Consider carefully who you choose as a fiduciary.

  • Mistake #10: Conflicting Directions on Burial Wishes

    Celebrity: Ted Williams

    After the death of baseball legend Ted Williams in 2002, his children from two different marriages battled in court whether he should be cryogenically frozen or cremated with his ashes scattered on the Florida coast, along with the ashes of his dog Slugger, who died a few years before him.

    Lesson: Make arrangements for burial preferences ahead of time, such as prearrangements with a funeral director, a document specifying a particular disposition, or a document designating a specific person to make such decisions.

The lessons of the estates of the celebrities detailed above are reminders to the rest of us to ensure an up-to-date and informed estate plan is in place.