You want a tip on an inexhaustible resource? Celebrity estate failures.
They never stop. Year after year, they keep making more.
Since last year's edition of celebrity
estate-planning disasters, we
have had a few that have just kept
going and going, like a certain cymbalsmashing
bunny rolling through the living
rooms of America. Not only do these
stories serve as good water-cooler chatter,
they also offer cautionary tales for
your clients, ripped from the headlines.
Danielle and Andrew Mayoras heartily
recommend the strategy of using
celebrity stories as tools to get clients
to do the right thing. She is an estateplanning
attorney and he is a probate
lawyer; together they wrote the book
Trial & Heirs: Famous Fortune Fights!
"We teach insurance agents how to
use these celebrity stories to get their
clients engaged in dialogue about estate
planning because it's often an uncomfortable
subject to bring up," Andrew
The Gary Coleman case is one such
example of many things not to do. Coleman,
who died last May of a head injury
from a fall, left a legacy of baffling estate
planning. But at least he did do very
rudimentary preparation, which is more
than some people undertake.
Take the shocking case of NFL quarterback
Steve McNair from a couple of
years back. The first surprise was the
circumstance of his death: he was shot
by his girlfriend in an apartment he
rented for her. It certainly was a stunner
for his wife, but it proved to be the first
of a few humiliations for widow Mechelle
McNair. Despite her husband's $20
million estate and many potential heirs,
he neglected to draft a will.
McNair's widow had to beg a probate
judge to release some money from the
estate, which had been frozen pending
a payment of $3.7 million in federal and
state estate taxes-not necessarily the
final tax bill, by the way. Steve McNair
had two sons with Mechelle and he had
two other sons from a previous relationship
who are also heirs.
Even though McNair died on July 4,
2009, his estate is still frozen as issues
are being resolved. Between the taxes
and legal fees from years of probate action, who knows how much of the
nearly $20 million estate will be left.
Julie Ann Garber, an estate-planning
attorney with Becker & Poliakoff, Fort
Myers, Fla., said the McNair case astonished
"I've actually worked with NFL players
and I was shocked when this man
did not have an estate plan," said Garber,
who also writes about estate planning
on About.com. "With the players
I've worked with, that's one of the first
things, regardless of their age, marital
status or whatever, that their agents tell
them: get a plan."
Not only does the lack of any planning
tie up and diminish the estate, it also
takes some decisions out of the hands
of surviving parents.
"The children with his wife are going
to get all of their money when they're
18," Garber said. "They are going to get
millions of dollars when they're 18. Not
a good idea."
Another person who should have
known better was John Denver. He
famously sang in the '70s of his gratitude
for being a country boy, but he
might have taken his simple living a little
too far. He did not leave a will when
he crashed an experimental plane and
died on Oct. 12, 1997. His family had to
wait six years while the estate ground
through probate court.
Convincing clients to engage in even
simple estate planning, such as drawing
up a will, has always been difficult, and
apparently it is getting even harder. A
Harris Interactive poll released last year
showed that only 35 percent of Americans
had a will in 2009, which was down
from 45 percent in 2007.
Redd Foxx did not have a will when
he died of a heart attack on Oct. 11,
1991, but he might not have thought
his estate needed one. Besides having
significant debt, Foxx also had the IRS
on his tail-and you know death does
not stop that agency. Nearly 20 years after
the Sanford and Son star went to the great
junkyard in the sky, the IRS is still waiting
to be paid $3.6 million.
Even though Foxx's
financial mess might not have seemed to
warrant estate planning, the lack of planning
reduced the likelihood that the estate,
and the family, might ever be right side
up. The first courtappointed executor,
Foxx's daughter, Debraca Foxx, could not
account for royalties and other income. The new executor, a public
administrator, is bringing in income and
working on a deal to sell the Redd Foxx
story. Although the executor is hopeful
the sale would settle some or all of
the tax bill, the Foxx family is opposing
Then there are those who did estate
planning but undid some of it afterward.
Marlon Brando, for example,
became a real Wild One toward the
end of his life, even demanding that
his room be locked after his death so
no one would steal the buttons off his
shirt. Not only did he make some questionable
changes in his planning, he also
made an oral promise-or so his housekeeper
Angela Borlaza said Brando gave her
a house in the San Fernando Valley
and promised continued employment
after his death. She sued on both issues,
eventually settling for far less. That was
only one of the challenges the estate has
faced, said Andrew Mayoras.
"There were a lot of funny circumstances,
lawsuits and fighting going on
with that estate," Mayoras said. "But
the main lesson to draw is to never rely
on verbal or even written wishes. You
should always put your wishes into a
will or, better yet, a trust."
Another case of changing plans
while not in the best frame of mind is
Elizabeth Edwards. Probably no one
in America would blame her for cutting
her philandering husband out of her
will, which she signed six days before
she died of breast cancer on Dec. 7, 2010.
But North Carolina does
not allow that and spouses
have a right to make a claim
against the will.
She had a trust, so it is
possible she provided for
John in that, but the Mayorases
said it was unlikely that
her trust would mention her
husband if the will did not.
Edwards used a pour-over
will, which transfers assets
into a trust after death,
Danielle Mayoras said. It is
a handy tool, especially if
someone does not have time
to set up a trust completely.
But it can have its drawbacks,
as Michael Jackson's
A significant benefit of a
trust is bypassing the public
glare of probate court. But that aim is subverted
when a trust is not funded before
death. Those assets then pass through probate
court to funnel into the trust. That
was why the world cringed through the
sordid details of the Jackson clan's dysfunction
during the probate case.
Dysfunction was also the key word
in two of the latest celebrity spectacles,
Gary Coleman and Dennis Hopper.
They both had one thing in common,
a wife who could be charitably referred
to as a tad intense.
Coleman did not help matters by his
less-than-rigorous approach to estate
planning. Since he died last May,
three wills have appeared. The first
one was from 1999 and left everything
to his manager. Then one in 2005
left everything to a woman he lived
with but apparently was not romantically
linked to. Another one was
handwritten in 2007 after Coleman
married Shannon Price. He named
her sole beneficiary, writing, "I made
this change of free will and was not
coerced in any way."
Free will or whatever, that wish would
have been undone when the couple
divorced the next year. (Some might
recall the noble attempts to rescue the
marriage on Divorce Court in 2008.)
But Price had another card to deal. She
claimed that she and Coleman still lived
together and believed themselves to be
married. Because their state, Utah, is
one of the few that recognizes common-
law marriages, Price said she was
still wedded to Coleman when he died.
In fact, she said her love for Coleman is still so strong that she wants to wear
ashes around her neck.
Coleman not only did not update his
will to reflect his divorce, he also did
not change other documents, such as
the medical power of attorney, which
was still under Price's name when Coleman
fell and slipped into a coma. So his
ex-wife had the authority to pull the
plug, which she exercised. The Coleman/
Price relationship might have been
"special," but not many people would be
comfortable with their ex-spouse holding
the power of life and death over
The Coleman case is another example
of keeping estate planning current.
In Dennis Hopper's case, he tried
to update but not soon enough. Three
months after he filed for divorce, Hopper
tried to remove one of his children
as a b eneficiary f rom h is $ 1 m illion
life insurance policy. The child was a
daughter he had with his wife Victoria
Duffy, who was already was due
$250,000 of the death benefit because
of a premarital agreement. Hopper
wanted his three adult children to have
the remainder of the policy. The judge
did not allow it, which is not unusual
during a divorce.
Hopper's death did not quiet Duffy's
claims. She is still suing the trust with
claim after claim. It will take a strong
trust and trustees to withstand the
onslaughts. Just imagine what it would
be like without the trust.
A trust would have helped Walter
Cronkite's family avoid some embarrassment.
When the venerable TV news
broadcaster died at 92 in 2009, he had
purposely left his girlfriend out of his
will. He had said he had been generous
with her in his life, so that was sufficient.
The New York Post handled it
with its usual brass-knuckle subtlety:
WALTER JILT$ GAL PAL!
Cronkite might have been able to
spare his family that headline. But the
most trusted man in America did not
set up a trust.
"That does highlight one of the
key advantages of using a trust," said
Andrew Mayoras. "It keeps your
affairs-what assets you had and any
family baggage-out of the court system
and out of the public record."
In fact, it has been a constant lesson
learned from years of reviewing estateplanning
trust works wonders. Trusts are often a
tough sell, Garber said, but clients' families
are grateful when they work well.
She saw this play out earlier this year
when a client died.
"I had been working with her and
her husband since 2005," Garber said.
"The husband died in '07. We got her
set up with a trust in 2008. I helped
her get everything in it because, I said,
‘You need to do this because it will just make it so much easier for your
And so now I'm working with the family
and they're doing what they need to
do. There's no probate, no judge looking
over their shoulder. And they're saying,
‘Why doesn't everyone do this?'"
Why, indeed? Advisors cite clients'
two key reasons: being afraid of losing
control of the estate and thinking
they do not have enough assets to
justify a trust.
Danielle Mayoras said clients have to
understand that a trust puts more control
in their hands.
"You're in control of your assets but
you're changing them to a new pocket,"
Danielle Mayoras said. "In my case, if
I'm wearing pants, I have one pocket
that says ‘Danielle Mayoras' and the
other that says ‘Danielle Mayoras' trust.'
My real estate and my assets are simply
changed to that other pocket. But it's
still my pocket so I can still spend the
money or transfer the money."
The trust also helps ensure that the
client's wishes are carried out. In the
case of many of the celebrities InsuranceNewsNet
features, executors are
often struggling to understand what
the deceased would have wanted. In the
case of Marlon Brando-did he really
want his housekeeper to have one of his
houses? Expressing that in a trust would
erase all doubt. With Steve McNair-
would he have wanted his children to
become millionaires at 18? Probably not,
but he lost his chance to control that.
And Redd Foxx-would he have wanted
a third-party administrator that he did
not choose deciding how much his life
story is worth and who should buy it?
Who's to say? Certainly not Foxx.
And although Foxx had more debt
than assets and might not have thought
he needed to worry about his estate or
trustees, his estate is still a problem 20
years after his death. Danielle Mayoras
said it's a key lesson that a family of any
means can use a trust. "There's not an
actual amount-that if you have this much
money you need to have a trust," she said.
"The real question is whether you want
your loved ones to avoid probate court.
I've worked with clients who have a very
modest estate, but they chose to use a
trust because they want to avoid family
fights down the road. If you're disinheriting
a child, if you're in a second marriage
situation, if there's a sibling rivalry that
you want to avoid, a trust gives a family
more protection to decrease the likelihood
of court battles and have everything
pass much more smoothly."
Trusts become even more important
with wealthy clients to avoid probate
and to help with some tax issues.
But, of course, life insurance is a key
tool for dealing with tax impact. This
is particularly important for owners of
large assets, such as a business.
Robert H. Brooks' family found
that out. You might not know Brooks,
but you know the restaurant chain he
Brooks' family had to sell the chain
and say good-bye to its $1 billion a year
in sales, partly because of estate taxes.
The sale price was not disclosed, but the
chain was reportedly worth up to $250
million. The estate tax was 46 percent
when Brooks died in 2006, meaning the
family could have owed $115 million.
Many family-owned businesses face
this problem but have not planned for
it. It is imperative for advisors to help
families understand this because time
is the enemy, according to estate planners.
With each passing year, the owner
of the business becomes more expensive
to insure-if he or she is in fact
insurable. Brooks, for example, developed
diabetes, a significant red flag in
the cubicles of underwriting.
Planning for estate taxes is one of
the lessons that the families of the rich
and famous learn year after year. Or
perhaps it is more accurate to say that
some celebrities never learn. But we do,
because you can be sure a whole new
crop of estate-planning disasters will be
awaiting us next year. See you then.