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Wednesday, June 1, 2016

Celebrity Estate Planning Blunders

Let's take a trip down memory lane to highlight a few “celebrity estate planning blunders.”  While you may not immediately relate to these specific celebrity situations, there are lessons that apply to current estate planning choices. 

The legendary actress Marilyn Monroe is making more money than ever although she died over 50 years ago!  Marilyn’s will left most of her estate to her beloved acting coach Lee Strasberg, who died in 1982, leaving his interest to his third wife Anna.  Anna Strasberg hired a company to license Monroe’s products, and auctioned off many belongings, including the dress she wore to JFK’s birthday celebration for more than $1 million.  Although she received millions of dollars from Marilyn’s estate, the two had never met.  Marilyn’s plan should have provided for alternate beneficiaries if her chosen one did not survive.

Joe Robbie, first owner of the Miami Dolphins, built a stadium with $115 million of private funds.  Robbie died just three years later, having created an estate plan laying out his intentions for his business, wife and nine children.  In Robbie’s plan, ownership of his enterprises would remain in his trust, providing his wife with an income for the rest of her life.  His trust named three of his nine children as successor trustees, which surprised and infuriated Robbie’s wife and the other six siblings.  Siblings filed suit against siblings.   Mrs. Robbie demanded her lawful 30% share of his estate as a bargaining tactic to maximize leverage to expand the appointed trustees.  Unfortunately, Mrs. Robbie died before she could withdraw the 30% demand, which precipitated a mandatory appraisal of all estate assets necessitating the liquidation of assets to pay the 30% share.  Her unexpected death added to the demand for cash to pay estate taxes due nine months following her death.  Because of a lack of liquidity, the team and stadium had to be sold to pay approximately $47 million in estate taxes.  Had Joe Robbie explained his intentions and business succession plan to his family there would likely have been a different outcome and less chance of a family feud.

We first met Sonny Bono as part of Sonny and Cher.  Singer, songwriter, restauranteur, producer, former mayor of Palm Springs, U.S. congressman, husband, and father, Bono never got around to creating a will.  When he died in a skiing accident at age 62, his estate was valued at approximately $1.7 million but also contained royalty rights and residuals from his music career.   His wife, Mary Bono, spent years in court battling to be named executor of his estate and have control of his music rights.   Adding to the drama, Cher, his former wife, sued the estate for $1.6 million for unpaid alimony, child support and attorney’s fees from their 1974 divorce. Another twist was the claim by a 35-year-old man that he was Bono’s son.  Bono’s failure to plan left an unexpected legal and financial mess for his family.

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