This is the first in an occasional series on preparing for the inevitable.
Compounding the tragedy of Philip Seymour Hoffman’s addiction and early death is the huge mess he left behind because his will was woefully out of date.
Like so many others, the Oscar-winning actor put his family’s legal and financial future on hold because he didn’t expect to die any time soon. His story is a wake-up call for procrastinators who think leaving a handwritten note on the fridge will settle their affairs.
When Hoffman made his will in October, 2004, he was living with partner Marianne O’Donnell and their one-year-old son, Cooper. By the time Hoffman died last month, the couple, who never married, were estranged and the parents of three children. We may not care about marriage certificates, but estate law often does. Worse, Hoffman, who left the bulk of his estate to O’Donnell, had set up a trust fund for Cooper but made no provision for his two young daughters. This has left a grieving O’Donnell to navigate a tax morass that could approach half the value of Hoffman’s estimated $35-million (U.S.) estate, according to Forbes magazine.
Even those of us with paltry estates don’t want our offspring trashing our memories or squabbling among themselves after we’re gone. Nor would I want my children to be disinherited because my husband, after drying his tears following my demise, falls prey to a grasping widow with kids of her own.
So I consulted two will experts, lawyers Leslie Kotzer of Fish & Associates and Mary Stokes of Legge & Legge, and asked about the worst mistakes people make.
Not making a will
If you don’t make a will, you forfeit your right to say how you want your property and possessions distributed. The law steps in to make those decisions, beginning with a spouse and followed by children – a process that can be cumbersome and expensive. If no next of kin materializes, your estate goes to the government.
Doing it yourself
Death is forever. You can’t consult a lawyer from the grave. Like many people, my husband and I had a “document” we downloaded from the Internet on the eve of a trip to Europe, replacing an equally flimsy printout prepared back in the last century. To my shock, I realized that we had ignored important events, mixed up the functions of trustees and guardians, and inserted weasel clauses that could set our heirs at each other’s throats. You may think you are saving money by doing it yourself, but you are probably adding to the expenses your executors will incur – and those costs come out of your estate.
Forgetting to update
The cardinal rule of estate planning is to review and update your will every time there is a major change in your life, especially marriage. An existing will is invalidated when you marry, but not when you split up, unless you are divorced or have a legal separation agreement. My husband and I have only been married once, so no complications there. Still, we fell into the “born after” trap. Our DIY will left everything to our two children, stipulating that if, for example, our son predeceased his sister, she inherited his share of our estate, thereby bypassing our grandchildren, who were born after our “will” was drafted, eight years ago.
A will allows you to name both the guardian (who will raise your children) and the executor (who will look after your estate). Parents tend to think these two roles are best handled by the same person, rather than separating the roles to ensure checks and balances. What if the guardian decides to plunder your estate to build an expensive addition to house your children, thus reducing their inheritance? Also, instead of appointing a single guardian, people tend to appoint a couple. But what if they divorce and get into a custody battle over your children? Better to name a blood relative; that way the children and their inheritance remain in your extended family.
Determining the ‘shares’
Grown children can be tricky when it comes to bequests. You might want to favour the child who has been the family caregiver, or set up a trust fund for a disabled child, but rewarding children simply because they have not achieved the material success of their siblings can be a recipe for resentment. Besides, who knows what will happen in future? Even the wealthiest entrepreneur can end up pounding the pavement. You should explain the reasons behind your decisions and face the possible wrath of your other offspring while you are still alive.
There are many more pitfalls in the inheritance game, but my husband and I are now persuaded that we need a real will, customized for our circumstances and drafted by a legal expert. Then we can move on to the really difficult issues: Who gets the French clock from his father; and who gets to decide when it is time to pull the plug?Report Typo/Error