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When Bad Things Happen to Good Estates

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We are a culture of action. Fast and Furious sells tickets. Accidents invite rubbernecking. Fires attract crowds.

We cheer the heroes who run in to save the victims. We cluck a satisfying “tsk, tsk” afterward. 

Such is the spectacle of celebrity disasters. The tales might change from year to year, but the morals thread them together into an accessible estate-planning guide for clients. 

In fact, estate planning is one of the key areas in which agents and advisors can be the real heroes to families. Sure, the glory goes to the people who run in to put out the fire, but what about the people whose work prevents the disaster in the first place? Those are the unsung guardians who ensure safety and prosperity.

The celebrities we’ll look at this year could have benefited from a hero in their lives — basically, someone to save them from themselves. Whether it was from hubris or sheer indifference, these folks built the foundation for their crumbled legacy.

Simply put, these stories feature people who did something very well that earned them notoriety, and they needed people who were equally talented in their own areas to assist them. Here is something to consider: These are estate-planning failures, but who did the failing?

chris-kyle.jpgIn Chris Kyle’s case, he was an expert marksman, so good that he is credited with more kills than any other military sniper, and was the hero of the hit movie, American Sniper. But he was way off target in estate planning. In fact, he never even took aim.

Kyle’s life often was endangered as a wartime Navy SEAL. He was shot twice and suffered other injuries, physically and mentally. But nobody advised him to think of his wife by doing some estate planning while he was busy serving and recuperating from his service. 

He was just getting to a stable place in his post-war life when a fellow veteran shot him to death at a firing range. In a sense, he died in the Iraq War because the shooter was suffering from a post-traumatic stress disorder (PTSD). 

Kyle died while doing what he had dedicated his life to, helping vets cope with PTSD. In fact, he had said he wanted profits from his book, American Sniper: The Autobiography of the Most Lethal Sniper in U.S. Military History, and movie to benefit vets and their families. Friends said he called the profits “blood money.” But he did not have a will or any other estate planning officially established, so his wishes died with him. 

A lawyer whom Kyle had worked with had accused his widow, Taya, of not honoring Kyle’s intentions. That has led to a lawsuit and ill will with others who claim she is failing to live up to Kyle’s word.  

Andrew Mayoras, an estate-planning attorney and co-author of Trial & Errors: Famous Fortune Fights!, said Kyle’s lack of planning put his widow in the crossfire of potshots. 

“If he did want them to receive something from it or all of it, he should’ve put it in a will,” Mayoras said. “A will would have erased this uncertainty and doubt, and there wouldn’t be this question hanging over his widow’s head.”

Even though a will is the cornerstone of all estate planning, it is still not universally applied. Mayoras and his wife, Danielle, a fellow attorney, have a website, trialandheirs.com, where they discuss many celebrities who died without a will. But, he said, a will is not just for people of considerable means.

“It’s really surprising that (Kyle) didn’t have a will, especially after the book started to have some success,” Mayoras said. “But all soldiers should have at least a basic will in place.”

Elizabeth Dipp Metzger, principal of Crown Wealth Strategies in El Paso, specializes in estate planning. And she has a message for anybody who has not had a will drawn up.

“There are a lot of people, even military families, with basic amounts that they think don’t require a will,” Metzger said. “But there are always so many details in terms of children and education and family maintenance that if you don’t write it out, somebody’s got a will for it.  It’s called probate.”

Metzger said it’s not just clients with moderate assets who don’t have wills. She has seen some who have enough assets to qualify for the federal estate tax but don’t have a will. 

“It’s amazing,” she said. “You’re talking about people with a $100 million estate, or people with a $23 million company, and they don’t have a basic will.”

In fact, it has reached the point that she is surprised when a client has a will. Sometimes people are too busy to think about it, but it gets down to the basic human resistance to contemplating one’s mortality.

“Family patriarchs and business owners are never going to die and they never want to retire and they never want to start talking about it,” Metzger said. “They’re all good until the day that they’re on their death bed, making their wills and trusts. That’s when problems happen. If you’ve got your head together, there is no reason not to do it.”

Metzger said it is part of her practice to ask clients about their planning. She illustrates that the probate process would be far more intrusive and expensive than the $500 to $1,000 to get the proper documents in place.

“I think it’s not just because they don’t want to,” she said. “It’s that they don’t have guidance.”

Cathy Pareto, president of Cathy Pareto and Associates in Coral Gables, Fla., also said she sees it as her duty to introduce estate planning to clients. She believes in it so much that she has written on the subject for Investopedia, so the general public can learn estate-planning basics. 

“Planning before you die or before you become incapacitated is essential for anybody,” Pareto said. “The worst time to think about the need to have a plan is after you’re dead, and your family is fighting for your stuff. Or you leave behind a family that depends on you, like in the case of Chris Kyle.  So that inspired me.”

But even good estate planning doesn’t prevent families from fighting over stuff, as in the case of Robin Williams. The comedian was known for his zany antics but those hijinks did not carry over to his estate planning. He had what many called a sound plan. But there was just enough slack in that plan for a fractured family to crack it open.

robin-williams.jpg“I think that case boils down to vague language in his documents,” Pareto said. “It had to do with personal items, memorabilia, effects of the house. His wife had one interpretation of what that might mean, and the kids from his previous marriages had another one.”

What Williams’ third wife called “knick-knacks” that fall under the provision of her receiving the house that they shared and its contents, his three children regarded as collections that were important not only to him personally but to his art. 

For example, in that house is the pair of rainbow-colored suspenders that Williams made famous in his first TV show, Mork and Mindy. So are his collections of watches, theater masks and comic books. The arguments are still wending through court 10 months after Williams committed suicide.

The lesson is that any ambiguity can lead to problems. This is especially true in blended families. 

“The more specific you are, the better, particularly when you have had multiple marriages,” Pareto said. “When other people interpret your wishes, that creates conflict.”

Transparency is always the best policy, the experts said. It could even mean suggesting that the client sits the family down and explains who gets what, so there is no question. Or at least, if conflict arises, it can be solved right there. Clients might be reluctant to do that and uncomfortable with that situation, but it spares family members some pain during one of the worst times in their lives. 

Williams’ case illustrated how just a little wiggle room can shake up an estate. Pareto has seen far worse when instructions are much looser.

“We had one client in his early 40s with one child from his first marriage and one from his second marriage,” Pareto said. “He was friendly with his ex-wife and continued to help support her, although it wasn’t part of his settlement.  So he had, really, two families that were relying on him.”

The client did well in the sports management world and was surrounded by advisors who didn’t appear to be doing him much good. She alerted him in front of his tax advisor and estate planner that his plan was outdated.

“We needed to get, at the very least, a trust in place to account for the fact that it was a blended family, and there might be some serious fighting going on if he should pass,” Pareto said. “It never got done and he had a heart attack.”

That led to two years of legal wrangling that put the families through anguish and drained their resources. 

“It was very messy, tragic and expensive,” she said. “And all of that could have been avoided by a few simple documents. A living trust would have done the job. At his death, it would have become irrevocable.”

How does an agent or an advisor open the door for the discussion? In some cases, it helps to paint the picture of what happens in the absence of planning. 

“Rarely does somebody actually come in and say, ‘I need help with this,’” Pareto said. “I have to sort of force the conversation by saying, ‘We’re helping with your investments; we’re looking at holistic planning, and, by the way, one of the facets of holistic planning is you need to look at estate and transfer issues. Or it’s just protecting yourself in the event of an unforeseen medical issue, where you are out of commission, cannot pay your own bills and cannot even speak.’” 

It forces clients to envision the possibilities. “Rare are the times when someone will come and say, ‘Hey, will you please help me set up a qualified terminal interest trust, or irrevocable life insurance trust?’ No, we have to explain that to them and why they need them.”

Metzger of Crown Wealth Strategies had another angle on what could be motivating the Williams fight: community property. In some states, no matter what the will says, a spouse can claim assets as community property.

“I had a client who refused to claim it, and now, of course, all the kids own all the assets,” Metzger said. “She didn’t have a lot of assets. So now, she’s subject to her kids. I don’t think they’re abusing her or anything else, but I really would have expected that she would’ve claimed her rights to her assets.”

Abuse might not have been a factor in that case, but it is the thread that weaves the next three celebrities together. The abuse can be as simple as undue influence or as pernicious as the outright financial abuse that Mickey Rooney claimed before he died a pauper at age 93 in 2014.

mickey-rooney.jpgPeople who knew Rooney only as a shrunken elf of a man might not realize that he was once on top of the world. He started as a child star before movies had sound and rose to be the highest-paid actor in the 1930s. Although he was a mere 5-foot-2 and had a funny mug, he was married to some of Hollywood’s most beautiful and glamorous stars, such as Ava Gardner. 

After a stint in World War II where he entertained troops in combat zones, he came back home to the world as an adult. But a really short guy couldn’t quite make it in adult roles, even if he was a gifted actor, singer and dancer.

Although he did rally periodically over the next several decades, his prospects and fortune dwindled. By 1962, he filed for bankruptcy and had already been divorced four times.

But he launched another phase of his career and appeared in 70 more movies, building up his bank account. Then, according to his own testimony to a Senate panel on elder abuse in 2011, his stepson and wife drained his money and dignity.

“Over the course of time, my daily life became unbearable,” he said at the hearing. “I felt trapped, scared, used and frustrated. But above all, I felt helpless.”

When he died, his estate was worth $18,000, despite his still appearing in movies. There was even a question as to where he would be buried because of the lack of money and his estranged wife’s conflicting demands. But he is now safely in the ground with fellow stars Charlie Chaplin, Jayne Mansfield and Rudolph Valentino at Hollywood Forever Cemetery.

Casey Kasem was another instance of alleged abuse but his situation also had a bit of blended family drama thrown in. The legendary radio announcer’s  distinctive cadence was familiar to many a traveler listening to his sob-story song dedications in his Top 40 countdown shows.

casey-kasem.jpgHis own story toward the end of his life veered into the bizarre as his wife moved him around the country as his health failed from Parkinson’s disease.

Kasem’s second wife, Jean, checked the 82-year-old out of his California nursing home because children from his first marriage visited him without her permission. Packed up with medical equipment and a health aide, they hit the road in two SUVs and disappeared for a few weeks. After his wife told a court that he was out of the country, Kasem was finally located in Washington state, where he was suffering from bed sores and high blood pressure in addition to being unable to speak and having difficulty swallowing because of his Parkinson’s. His eldest daughter, Kerri, reclaimed him and promptly took him off artificial food and water in accordance with an earlier directive he had signed. Kasem was put on “end-of-life” measures until he died on June 15, 2014.

But that wasn’t the end for Kasem. Kerri won a court order for an autopsy to investigate abuse allegations against Jean, but the widow absconded with Kasem’s body. He was moved first to Montreal and then to Norway, where he was buried, a long way from Glendale, Calif., where he had preferred to be interred.

Kerri went on to resume her own radio career and became an elder abuse activist. The family apparently is still fighting over his $80 million estate.

MetLife took an unusual step in asking a judge to rule who should receive $2 million in life insurance. Kasem’s widow was named beneficiary but his children claim that she should not receive it because she caused Kasem’s death with her antics. That apparently is still unresolved as well.

ernie-banks.jpgIn Ernie Banks’ case, his family was surprised to learn that his caretaker inherited his meager estate after the Chicago Cubs legend died at 83. Apparently the eternally gregarious Mr. Sunshine wanted to cut his family out of his $16,000 estate, according to an eventual ruling.

The estate initially went to Banks’ wife, but then caretaker Regina Rice produced a will and other documents that Banks signed in October 2014, three months before he died of a heart attack. Relatives vowed to continue contesting the will even though a judge ruled it valid after hearing two paralegals testify that Banks knowingly cut out his family, including his children and estranged wife. 

One of the reasons why they might have a case is that dementia was listed as a contributing cause for his death, said Mayoras of Trial & Heirs. 

This is one of the reasons why any change to estate planning late in life raises suspicion, he said. Not only that, but the family has legitimate questions as to where Banks’ money went. 

“When Ernie played ball, it’s not like they were making the type of money that they make now by any stretch, but you would think just with the notoriety and everything he’s accomplished, that just from appearance fees alone, he has been able to amass more than $16,000,” Mayoras said. “It’s certainly a huge question, especially because his children were not estranged, unlike in the Mickey Rooney case. So, why would the caregiver, three months before he died, be named as his sole beneficiary?” 

The case is a reminder for families to check in on elderly relatives and their caregivers to guard against any potential abuse.

“That’s why we encourage people to stay actively involved in their elderly parents’ affairs, especially when there’s a diagnosis of dementia,” Mayoras said. “Sometimes, you can head these off if you’re on guard for suspicious behavior and help the person monitor his financial and legal documents.”

If a client approaches an advisor to make unusual changes to estate-planning documents, Mayoras recommends three steps:

» “Make sure that there is an experienced estate planning or elder law attorney involved in the transaction to help ensure that the person is legally competent to make these changes.”

» “Meet with the person alone and ascertain whether this is the person’s true wishes or whether they’re being influenced improperly by somebody else. When there’s a real question about mental capacity, get a full mental evaluation so there is no doubt whether the person is competent.”  

» “Videotape the execution of the dockets making the changes to help lay it to rest, because maybe Ernie Banks really did want to make these decisions. Maybe he was competent and did this out of his own free will. And if that’s the case, I would’ve liked to see the lawyer or any financial advisors involved take extra steps to document that, just knowing that this looks suspicious, and to help avoid or minimize a family fight down the road.”

Mayoras suggested an approach to take if a client or family bristles at the thought of videotaping.

“We advise addressing that by saying, ‘I’m not suggesting videotaping because I think there’s something funny going on, but it’s because you don’t want to be stuck in a family fight. Let’s take the extra mile for their benefit so that if a challenge does happen, they can show that this is what you truly wanted.’”

Tom Clancy was an author known for complex thrillers, such as The Hunt for Red October and Patriot Games, so it’s fitting that his estate would be complicated. And it also may be appropriate that one loose thread can pull apart a major part of the scheme.

tom-clancy.jpgClancy’s $83 million estate includes, among other assets, a $65 million ownership stake in the Baltimore Orioles and a 535-acre estate overlooking the Chesapeake Bay, which is also home to a rare, fully functional World War II Sherman tank. 

The assets were split into trusts benefiting his current wife and child as well as his children from a previous marriage. So, the blended family dynamic is in place. Add to that the executor’s contention that the trusts should bear the $16 million estate tax bill equally and you have the ingredients for a court fight.

Clancy’s widow, Alexandra, said her husband did not intend for her to pay estate tax and established the trust to ensure that. 

This fight illustrates a common problem with trusts, Mayoras said. “He did specify in one of the trusts that he didn’t want his wife to have to bear any estate taxes, which would be typical because transfers between spouses are typically not subject to the estate tax, rather when the second spouse dies, that’s when the estate taxes would apply,” he said. “The problem here is that he did not fund his trust during his lifetime. He did not transfer his assets into his trust, so the trustees decided that they were going to determine how to allocate the assets, and it was done in a way that would result in the estate taxes being paid off the top before the trusts were funded, meaning ultimately, that his widow would have to pay a share of the estate taxes.”

It appears that this is counter to Clancy’s wishes based on the language in the trust, but because he did not put money in the trust while he was alive, he left everything to the discretion of the trustees. 

“Setting up trusts is only half the battle,” Mayoras said. “For trusts to really work effectively, they need to be funded during one’s lifetime. When a person transfers assets into the trust in the proper way, then it dictates what assets pass to which person and in what manner. It’s again especially important in second marriage situations where there are divergent interests, of course, between the surviving spouse and the adult children from a prior marriage.”

Even though Clancy died in October 2013, the estate is apparently still in probate, with an administrator appointed to oversee its affairs.

Pareto added that life insurance is always a stand-by solution.

“If you know that you’re going to be paying estate taxes, one of the easiest ways to fix that issue is to get permanent life insurance inside of an irrevocable life insurance trust (ILIT),” Pareto said. “You keep it out of the estate – mind you I’m a big fan of term insurance, too.  But there are many circumstances where it makes better sense to have a permanent policy that you know is going to be around to pay the taxes.”

She helped set up such a strategy with a client to avoid estate tax problems. 

“We did a second-to-die policy inside of an ILIT, so that we knew that the children would not have to liquidate the family business to be able to cover the taxes,” Pareto said. “We assess that every couple of years.  So, as this particular client’s estate continues to grow, we’ve had to add on what kind of coverage they have inside of their ILIT. And we’re even looking at advance planning techniques to see if there are ways to move part of the shares of the growing family business out of the estate in such a way that the girls can have access to it in their own trust. But life insurance is a key part of that.”  

jim-morrison.jpgJim Morrison, unlike his contemporary, Jimi Hendrix, did have a will when he died in 1971 and joined the Forever 27 club. But the rock god ensured a court fight when he cut his family out of his will. His unequal royalty rights with his Doors bandmates also guaranteed contention.

Morrison left his estate to the girlfriend he was living with in Paris, Pamela Courson. However, living the rock ‘n’ roll life, Morrison left behind some issues, literally, in the form of paternity claims. That was one of many factors that would tie up the estate in probate for years. 

The case outlasted Courson, who died three years later, also of a heroin overdose and also joining the Forever 27 club. During that time, she got a small allowance granted by the court, but not enough to sustain her lifestyle, reportedly leading her to prostitution. She died on a couch in a Los Angeles apartment that she shared with two male friends.

Courson did not have a will, so her parents inherited Morrison’s estate, which prompted his parents to action. The Morrisons contended in court that Jim had actually married another girlfriend, Patricia Kennealy, in a pagan ritual that apparently involved a little bit of fire-walking and blood-drinking.

The parents eventually settled out of court, Mayoras said, adding that the Coursons ended up with the valuable royalty rights. Morrison did not have a huge amount of money when he died, but his royalties produce millions of dollars a year, all going to a couple of people who didn’t like him very much.

Mayoras said establishing a trust would have helped, but even that would have to be carefully constructed.

“A lot of estate-planning attorneys will just do a basic trust or will from a kit or it’s a fill-in-the-blank form,” Mayoras said. “But good estate-planning attorneys will really tailor the documents to the individual’s specifications, and try to address all the ‘what if’s.’ What if the person you want to inherit doesn’t receive the money?  

When do you want them to receive it?  How do you want them to receive it?  What happens if they pass away after you, but before they receive the money?  Then where do you want the money to go?  Who do you want to manage your assets after you’ve passed away?  These are all very important decisions that should be thought through and taken care of after thoughtful and deliberate consideration.”

ravi-kumra.jpgRavi Kumra might not have been a star, but he lived a little bit of a wild life, especially for a Silicon Valley venture capitalist. He had owned a California winery for a while and he funded tech ventures, which made him a wealthy man.

He also had a long-standing prostitute habit. One of those “girlfriends” had compatriots who decided to invade Kumra’s Monte Sereno mansion to rob him. They tied up and gagged him and his ex-wife, who lived elsewhere in the mansion, while they looted the place.

Kumra suffocated during the robbery, which his ex-wife thwarted by freeing herself and calling the police. 

It made for not only an unusual criminal case, but also an intriguing estate battle. That’s because another one of his “girlfriends” showed up with two girls she said were Kumra’s daughters.

Apparently, he had supported this second family, but Kumra’s two adult daughters were having none of that. They called the girlfriend a gold-digger who was at best the recipient of a sperm donor and fought it out in court.

The proceeding pulled back the veil on Kumra’s life, exposing the sordid details of his addictions to alcohol, drugs and day trading, along with his second life with various prostitutes. The younger girls were awarded $1,800 a month each in allowance.

Although Kumra’s story probably illustrates a life gone awry more than an estate-planning failure, he could have spared his family from the embarrassment.  

Metzger of Crown Wealth Strategies said accounting for illegitimate children is not unusual.

“Your best solution is to get your attorney involved and the mother of the child gets counsel as well,” Metzger said. “Have the parties come together and make some arrangements and agreement on exactly the value of that support and what that support will be. And you don’t exactly have to tell your spouse, but if you die, at least you’ve created some kind of certainty for your spouse, rather than just, ‘Oh well, they get half of the estate.’”

She recalled a client approaching her for assistance with such a situation.  

Such is the spectacle of celebrity disasters. The tales might change from year to year, but the morals thread them together into an accessible estate-planning guide for clients.will be a familiar name to those following politics in the 1990s. He was an heir to the Mellon fortune who spent hundreds of millions of dollars to counteract “the liberal slant to American society” and oppose the Clinton administration.

He also bankrolled the conservative newspaper, The Tribune-Review of Pittsburgh, with an income stream from a trust that his mother had established for him in 1935, with the remainder to go to his children after his passing. That was when his children learned that the trust had gone from more than $300 million to zero, apparently drained by supporting the newspaper.

The children have accused the trustees of mismanagement and although Scaife died nearly a year ago, the case is just getting to court. In the meantime, the children will have to get by on income streams from other trusts totaling $1 million a month for each child.

Richard-Mellon-Scaife.jpgThe Scaife example illustrates the value of transparency during a person’s lifetime, saving the family from anguish later. Its epilogue also shed a hopeful light on the fractured state of politics today.

Even though Hillary Clinton had accused Scaife of financing a “vast right-wing conspiracy,” Bill Clinton eulogized Scaife. The former president revealed that they had formed a “counterintuitive friendship.”

Scaife’s newspaper reported that Clinton said, “He fought as hard as he could for what he believed, but he never thought he had to be blind or deaf (to other views).”

That might be a legacy worth more than money these days. 

Steven A. Morelli is editor-in-chief for InsuranceNewsNet. He has more than 25 years of experience as a reporter and editor for newspapers, magazines and insurance periodicals. Steve may be reached at [email protected] Follow him on Twitter @INNSteveM. [email protected].


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