Phillip Seymour Hoffman, an accomplished actor, died suddenly in February at age 46 of a suspected drug overdose. Seymour had a long-term companion, Marianne O'Donnell, with whom he had three young children. Under the terms of his Will, a significant chunk of his $35 million-plus estate was left to O'Donnell. The media and estate planners have examined the Will, which has led to several estate planning issues garnering public attention.
This isn't the first star who has had poor estate planning, and unfortunately, it may not be the last. A recent article in The National Review, titled "A Hollywood Lesson for Everyday People: Trusts," emphasizes how one of the biggest misfortunes in the Hoffman story is everyone now knows his business. We all know what assets were left to whom, who was left out, and how much money he had. These are typically private concerns, but because Hoffman only had a will, which is publicly probated in open court, everyone has access to these public records. Fortunately, there is a simple way for people to keep their estate plans from becoming blog material (like this!): create a trust.
A revocable living trust is a common type of trust that can help secure your privacy. According to the original article, Hoffman said he did not want his kids to be "trust fund kids." This meant he did not want his kids to be spoiled by his acting fortune. However, his definition of a trust could have used some better intel. Hoffman's children actually would have been better off with a trust that set out specific distributions tied to some conditions or events, such as their 25th birthdays or to use for college tuition.
The terms and conditions of a revocable trust can be changed, amended, or canceled whenever the individual who made the trust chooses. That person—like Hoffman—would still have control over the funds while he was still living and could direct how the trust would operate after his or her death. Again, no one would know the details of Hoffman's estate—not even TMZ—if he had created a trust. Oscar or no Oscar, you will be a star with your loved ones if you take on the role of "consummate" estate planner and work with your estate planning attorney to nail your part.
You can learn more about this topic as well as other strategies on our website under the tab entitled: estate planning in Virginia. Be sure you also sign up for our complimentary e-newsletter so that you may be informed of all the latest issues that could affect you, your loved ones and your estate planning.
Reference: The National Review (August 8, 2014) "A Hollywood Lesson for Everyday People: Trusts"