Once again recently, the world lost another gifted actor: Philip Seymour Hoffman, well known for his role as Truman Capote in "In Cold Blood" as well as dozens of memorable parts on the big screen. His regrettable his death was not by natural causes – another incredibly talented celebrity who traded life for drugs. Life is very delicate, and the loss of a loved one is dealt with by those left behind for the rest of their lives. How tragic, how sad.
In the case of Hoffman, it was an example of what not to do when addressing your estate planning. The first error was using a real estate attorney instead of a tax and estate planning attorney. Lawyers, not unlike doctors, all have their particular areas of expertise. It was apparently easier to use the one that was most easily available than using the one most qualified. (Note: we mean no offence to real estate attorneys). The will contained many flaws and loopholes, and unfortunately, the usual way this type of error is found is when the person is gone, leaving a mess behind for those loved ones. The errors and omissions could have been easily avoided had he used a qualified advisor and kept up on his plan.
Hoffman was not married, but had a long time companion (Marianne O'Donnell) and three children. At the time of drafting, ten years ago, they had only one child who was named in the will specifically. Since the will had not been updated with the birth of his following two children, they have been left out of the will and the plan entirely. While I am reasonably sure the mother will take good care of all her children, the legal obligations and spider web of complications is massive: technically, the younger two children are entitled to nothing. Though together for many years, the fact that they were not married gives rise to very large tax implications. If married, the estate would have passed via the unlimited spousal exemption. Instead, if he left it all to O’Donnell, his $35 million dollar estate could have a federal tax bill of up to $11.9 million dollars: just being married could have saved a huge sum: a fact that the real estate attorney apparently failed to mention, or Hoffman ignored. Including NYS taxes, as much as $15 million may be lost of the $35 million to Uncle Sam (a non-relative)... and it all could have been avoided with proper planning. Had Hoffman consulted with a qualified planner familiar with estate planning techniques, he could have set up posthumous trusts for the children and lifetime income for his partner, and avoided a massive shrinkage of his total estate while giving order and equality to all his family members. He left a provision that all the distribution to his first born was to be distributed outright at age 30, a dangerous way to disburse funds to a relatively young person. A series of disbursements or trusts with trustees to oversee the best interest of the child or children would have been much wiser.
You don't have to be a celebrity or overly wealthy to have learned a lesson from Hoffman: get your estate planning in order, and review it every few years for changes. It's not necessary to
constantly change your documents, just review them to see that they continue to comply with your wishes; in the past few years you may have had new grandchildren, decided to "write out" a person you originally put into your will, or any of dozens of scenarios to necessitate a change. A reminder that here at Chestnut we have a complete estate planning department, extremely proficient in helping you prepare the documents necessary to give you peace of mind and make sure your legal issues are up to date: by a qualified, experienced and tenured team. If
you are due for a review, or if you don't have any wills and legal documentation at all, give us a call... we'll help you through it in a caring and efficient manner. Don’t leave a mess behind... losing you is tough enough