While you’d think the most famous and wealthiest celebrities would have solid estate plans in place, the truth is that many high-profile celebrities either passed away with a poorly drafted will – or even without a will at all. These costly mistakes are a reminder that end-of-life plans are crucial for safeguarding assets and protecting loved ones.
How financial advisors can help with estate planning
In a study by CEG Insights (formerly Spectrum Group), 85.7% of affluent investors saw a need for estate planning, but only 40.2% felt this need was being fulfilled.1 Estate planning is undoubtedly an important and expected part of a holistic financial plan, and while financial advisors don’t necessarily provide legal advice, they can support and encourage clients in planning to distribute their assets to heirs.
Celebrity estate planning mistakes to avoid
To truly understand the significance of estate planning, let’s take a closer look at some of the most costly – and common – mistakes made by celebrities. These high-profile examples can serve as cautionary tales for all of us.
Estate Planning Blunder #1: Prince
Consider the case of Prince, the iconic musician and entertainer, who died in April 2016 at the age of 57, leaving behind an estate worth $156 million with no will outlined. It’s hardly surprising that many people claimed to be his legal heirs, even an inmate in federal prison who said he was his son. The costly legal battles continue today, because, without a will, it’s difficult to determine what Prince intended to do with his assets.
Countless other celebrities, including Princess Diana, Sonny Bono, Bob Marley, and Jimi Hendrix, also failed to have wills, leaving their families to pick up the pieces. This oversight is one of the most common estate planning issues advisors see in their practices.
Estate Planning Blunder #2: Aretha Franklin
The legendary Queen of Soul, Aretha Franklin, passed away in August 2016 with multiple conflicting wills. The legal battles around her estimated $80 million estate continued for many years after her death. The Detroit Free Press states that three handwritten notes and one typewritten but unsigned will turned up in Aretha’s home. These notes indicate that her estate was to be divided between her four sons, but the details are unclear.
While Aretha didn’t have a formal will in place, even hard-to-read, scribbled notes can count as legal instructions under Michigan law. The ongoing family dispute over Aretha’s true wishes could have been avoided with a proper will. This case highlights the importance of clear and updated estate documents to prevent family conflicts and legal battles.
Estate Planning Blunder #3: Philip Seymour Hoffman
Actor Philip Seymour Hoffman died in 2014 with an estate over $35 million. He worked with a CPA to set up a will that left everything to his girlfriend, however, because he wasn’t married, his estate was subject to $12 million in estate taxes. In his will, Philip indicated that his girlfriend should support his kids after death, but didn’t define how.
A few important takeaways here are that a trust would have provided provisions to allow for Philip’s wishes for his kids to be carried out. It could have also helped mitigate the expensive probate and estate tax fees. Being single didn’t pay either, as the marital deduction could have reduced the estate taxes due at Philip’s death – so it’s worth educating clients about this unlimited deduction. Guardianship costs for minor children are another way estates are eroded. This case underscores the need for detailed planning and the potential financial implications of not using all available estate planning tools.
Estate Planning Blunder #4: Whitney Houston
Lastly, we have the example of Whitney Houston, who died in 2012. Although she had set up her will in 1993, it wasn't updated to reflect her family dynamics and financial situation. Whitney’s will established a trust at her death, but it didn’t account for the changes in her life over the nearly two decades since it was written. Her will contained language to provide for any unborn children, so even though it hadn’t been updated, her daughter Bobby was set to receive 10% of Whitney’s estate at the age of 21. Since Whitney’s net worth had grown significantly, that sum was $2 million.
The lessons we can learn from Whitney’s situation is that it’s often not enough to have an estate plan with a testamentary trust. In many situations, you may also want to establish a living trust to avoid probate and estate tax issues. You can talk through ways assets in a trust can be distributed without providing legal advice to clients. Clients will want to consider whether providing a lump sum of $2 million to an heir in their early twenties makes good financial sense.
Celebrities without a will
Here are examples of celebrities who died without a will. You can see the estimated value of their estate and how long it took to finally settle. Advisors can protect the heirs of their clients by encouraging clients to formalize an estate plan with a professional.
| Celebrity | Year of Death | Net Worth | Time to Settle |
|---|---|---|---|
| Howard Hughes | 1976 | ~$2.5 Billion | 37 Years |
| Bob Marley | 1981 | ~$30 Million | ~30 Years |
| Jimi Hendrix | 1970 | ~$20k - $80 MM | 30 Years |
| Sonny Bono | 1998 | ~$2 Million | > 25 Years |
| Prince | 2016 | ~$156 Million | 6 Years |
| Pablo Picasso | 1973 | $100 – $250 MM | 6 Years |
| Aretha Franklin | 2018 | > $80 Million | 5 Years |
| Chadwick Boseman | 2020 | ~$4 Million | 2 Years |
Actionable Steps for Advisors
1. Educate clients about the importance of estate planning.
Estate planning isn’t only for the rich and famous. It’s critical for every client to protect their wealth in the future and ensure their wishes are followed. That’s why it’s especially important to talk to your clients about estate planning.
Factors to address with clients include:
- The importance of not procrastinating in creating a will.
- The key pillars of estate planning: account titling, beneficiary designations, power of attorney, living wills, healthcare proxies; trust strategies, gifting strategies, and tax liability management.
- The importance of updating their will if they’re having children, marrying, divorcing, and experiencing other life events.
- The fairness of assets distributed to heirs at death and whether heirs receive current support that may result in a discrepancy and fighting around how much each child receives overall.
2. Collaborate with estate planning attorneys
By partnering with estate planning professionals, advisors can offer more comprehensive services to clients and increase client loyalty. Advisors can assist clients by coordinating the implementation of estate plans. They can also help clients save money by reviewing the client’s final wishes before they meet with the estate planning attorney.
Estate planning attorneys can add significant value for your clients during the estate planning process, lead to mutual client referrals, and drive successful estate planning outcomes.
3. Create personalized plans for clients
By leveraging strategic estate planning tools, tech, and experts, you can help your clients create plans that work for their specific situations.
- With Envestnet Analytics embedded into Envestnet | MoneyGuide, you can easily set up meetings with clients who don’t have wills in place yet and craft customized plans.
- The client’s profile page indicates whether clients have a bypass trust, power of attorney, advanced medical directive, and more, and whether they’re working with an estate attorney or not. These can be important aspects of discussing and crafting plans.
4. Conduct regular reviews
Plans change, circumstances change, and people change. So you’ll want to emphasize to your clients how important it is to review and update their estate plans on a regular basis. As a general guideline, plans should be reviewed every two years and updated every five years or sooner, depending on your client’s age and circumstances.
5. Explore Wealth Studios
Wealth Studios is designed to answer the “what if” questions clients have, what the transfer of wealth looks like between generations, the impact of establishing trusts, and the potential benefits of various gifting strategies. It’s well worth exploring estate planning strategies now to make the most of the years to come.
As Pablo Picasso said, “Only put off until tomorrow what you're willing to die having left undone.” The irony here is that Picasso left this world without a will. By prioritizing estate planning in your client conversations and supporting proper asset management, you can help your clients sidestep the costly errors that plagued Picasso and other notable figures. These conversations can safeguard your clients’ legacies and help ensure that their final wishes are respected.
Watch our on-demand webinar for more celebrity estate planning mistakes and lessons.
Explore Wealth Studios for estate planning tools and strategies to help clients avoid succession drama.
