Just because they're rich and famous doesn't mean they set it up in a way to pass it on to the next generation. Take Philip Seymour Hoffman. It is always especially tragic when anyone dies leaving young children. His tragic death also emphasizes the importance of continuing to examine your plan, especially when minor children are involved, and even more so when one's "life partner" is not actually their spouse.
There were significant defects in Hoffman's plan. He left a will that he signed in 2004, leaving his estate to his "friend and companion" who is the mother of his three children but is not his spouse. That estate is estimated to be $34 million. In 2004 the couple only had one child, who was named in the will.
Among the critical mistakes: the estate will bear a significant burden of paying estate taxes because it cannot use the unlimited marital deduction since they were not married. The will fails to provide for all of Hoffman's children, particularly the two born after 2004. The will is also public, depriving Hoffman and his estate of the privacy that he seems to have guarded during his lifetime.
How could this have been resolved? Marriage, for one, could have helped defray or avoid estate taxes now, allowing that money to grow and generate income for the benefit of Hoffman's family. It could have also removed any doubt as to whether it provided for children born after the will. And a living trust would have kept the will and other information about the estate away from prying eyes.
Perhaps the most important tool that Hoffman could have employed was an ongoing continuing relationship with a trusted estate planning attorney. A particularly interesting article
identifies the turning points in Hoffman's career that would have been prime opportunities for him to revisit his plan and fine tune it to adjust to his changed circumstances, no matter how slight.
One quote from that article is particularly apt:
In reality, an estate plan isn't just a static set of documents that are signed and then stuck in a safe deposit box until the client dies. An estate plan is a system of contracts, transactions and property arrangements that address and are dependent on financial, personal, and legal facts that change frequently. An estate plan is never complete. Like a financial plan, a business plan, income tax compliance, and healthcare strategies, an estate plan is dynamic, reflecting our clients' lives and our estate tax system. It needs consistent review and regular attention.
As estate planning attorneys, we must explain to the client the dynamic and continuing nature of estate planning, disability planning and business succession planning. We must resist the idea of fixed-fee, off-the-shelf estate plans and engagements that are considered to terminate after a single execution ceremony. Instead, the attorney and client must accept the engagement as a lifetime relationship and recognize that the estate plan will and should change over time, sometimes as a whole and sometimes in pieces. Of course, when the client dies, we'll be sad, but we'll also be proud of the role we've played as the client's trusted advisor, and we'll be confident that the client's estate plan will represent the best we could have done.