Rich and Famous Failures to Plan
I will never forget a statement one of my former partners made when he saw a man we both knew while walking through our office. He said, “Jim, you are not completely worthless. You can always be used as a bad example.” I feel the saw way about some of the rich and famous who procrastinated too long and made their families pay the price of the procrastination. Here are some good examples of the failure to plan.
No Will – Prince, Actor James Dean, Author Stieg Larsson, Singer Amy Winehouse
Prince died without a Will and an estate valued at $200 million. We don’t know who Prince would have wanted to inherit his assets, but without a Will 45 people claimed to be Prince’s heir entitled to some of Prince’s assets. After litigation and attorneys’ fees a court ruled that Prince’s sister and five half-siblings are the rightful heirs to the music icon’s estate. A big winner is also the executor who gets $125,000/month and a small army of lawyers who’ve collected $8.8 million from the estate as of early 2018.
Solution: If Prince had a Will or a Trust he could have left his assets to the person or people he selected rather than the people the court selected. The big advantages of a Trust are: (i) its private and confidential and the heirs are not known to the public, (ii) the trustee would be entitled to reasonable compensation, but not $8.8 million over two years, and (iii) Prince would select his heirs, not the court.
James Dean was a hot movie heart throb when he died in an auto accident at age 24. He died without a Will and under the law of intestate succession of his state of residence James Dean’s estranged father inherited all of James’ assets despite the fact he abandoned young James when James was 9. Instead of millions of dollars going to the people James Dean loved, the money went to his estranged father who he never really knew.
Solution: If James Dean had signed a Will or put his assets into a Trust he could have decided who inherited his property. Without a Will or a trust, the law of the state where James Dean resided at the time of his death determined who inherited James’ estate.
Swedish author Stieg Larsson died suddenly of a heart attack in 2004 at age 50. He died before his first novel, The Girl With the Dragon Tattoo, was published. Since the publication of his first book his three novel Millennium trilogy has sold over 50 million copies. Movies made from his books have also been very popular. U.S.A. Today selected Larsson as its 2010 Author of the Year. Larsson never married and had no children, but he did have a live-in significant other named Eva Gabrielsson with whom he lived for 32 years. Under Swedish law Eva inherited nothing from Stieg’s estate because he didn’t have a Will. So sad. I am sure that Stieg would have wanted the love of his life to inherit some or even all of his estate, but his procrastination and failure to plan makes him another bad example of how the loved ones of the deceased are the ones who pay the price and suffer because of the failure to plan. One piece of good news for Eva is that Stieg’s laptop contained Stieg’s fourth book. The family wants to publish the book, but cannot get it because it is under Eva’s control.
Solution: Sign a Will or put your assets into a Trust so you (rather than the government) choose who inherits your property.
Rock singer Amy Winehouse passed away from accidental alcohol poisoning at the age of 27 in 2011. She was worth millions, but did not have a Will. She had an ex-husband and a brother who she might have wanted to inherit some of her estate, but because she did not have a Will everything went to her parents.
Solution: Sign a Will or put your assets into a Trust so you chose who inherits your property.
Actress Anna Nicole Smith – Failed to Update Her Will
Model and actress Anna Nicole Smith was involved in a famous lawsuit involving the $1.6 billion estate of her husband J. Howard Marshall who died at age 90 one year after he married the then 28 year old Anna Nicole. That case ultimately went to the U.S. Supreme Court after Anna’s death and her estate lost with the result that Anna’s estate got none of Mr. Marshall’s fortune.
Anna Nicole Smith is a famous bad estate planning example not because of J. Howard Marshall or because she did not have a Will. She is a famous bad example because she had a Will, but did not update it after her son Daniel died and the birth of her daughter Dannielynn. Anna Nicole died suddenly at age 39 on February 8, 2007, of combined drug intoxication with the sleeping medication chloral hydrate as the major component. No illegal drugs were found in her system. The official report states that her death was not considered to be due to homicide, suicide, or natural causes.
Anna Nicole signed a Will on July 30, 2001 that contained the following provisions:
- She left her entire estate in trust to her son Daniel. The trustee of the trust was her then boyfriend Howard K. Stern.
- If she married in the future or if she had any future children all future husbands and children were expressly disinherited.
Anna Nicole’s son and only heir died before her at age 20, three days after the birth of Anna Nicole’s daughter Dannielynn. The Will did not name any alternate heirs. Unfortunately for daughter Dannielynn her mother’s out-of date Will resulted in Dannielynn being disinherited and the estate going to other family members of Anna Nicole.
Solution: Estate planning is not a sign and forget experience. Your estate plan should satisfy your goals as of the date it is signed, but as time passes things in your life will change. You must update your Will or Trust periodically so that the plan of distribution is current, not out of date like Anna Nicole Smith’s Will.
Actress Marilyn Monroe – Used a Will Instead of a Trust
Marilyn Monroe committed suicide at age 36 at the height of her super-star movie career. She did have a Will that provided that 75% of her residual estate was given to her acting coach, Lee Strasberg. Her acting coach married Anna and when he died he left all of the 75% of Marilyn’s estate to Anna who was a complete stranger who Marilyn never knew. Anna transferred the estate assets into Marilyn Monroe LLC, a Delaware limited liability company, a company that she managed. The other 25% of this company was owned by the Anna Freud Centre in London, an institution “committed to improving the emotional well-being of children and young people.” This institution inherited the other 25% of Marilyn’s estate that she left to her doctor and friend Dr. Marianne Kris. Anna Strasberg owned 75% of the company that was purchased by Authentic Brands Group and NECA for an estimated $50 million. The estate of Marilyn Monroe generates huge earnings. According to Forbes 2010 – 2011 top earnings of dead celebrities list Marilyn’s estate earned $27 million, which was number three on the list behind the estates of Michael Jackson and Elvis Presley.
Solution: Marilyn should have created a Trust and left the 75% of her estate to Lee Strasberg for his life with the balance remaining after Lee’s death going to her other loved ones or to a charity of her choice.
Terri Shiavo – No Living Will or Healthcare Power of Attorney
Terri Shiavo is famous only because of the expensive public legal battles over her healthcare between her husband and parents that lasted many years. Terri Schiavo suffered full cardiac arrest and massive brain damage on February 25, 1990, when she was 27. Her doctors said she was in a vegetative state.
In 1998 Michael Schiavo, Terri’s husband, filed a lawsuit asking the court to order that the doctors remove Terri’s feeding tube pursuant to Florida law. In what became the start of years of expensive litigation Terri’s parents disagreed with Michael and asked the court not to order that the tube be removed. The court ruled in Michael’s favor and ordered the doctors to remove Terri’s feeding tube. The tube was removed, but reinserted several days later. On February 25, 2005, the court again ordered that the Terri’s feeding tube be removed.
Several appeals and federal government intervention followed, which included U.S. President George W. Bush returning to Washington D.C. to sign legislation designed to keep her alive. Ultimately the federal court upheld the original decision to remove the feeding tube. The tube was removed on March 18, 2005, and Terri died on March 31, 2005. Terri’s parents and husband were involved in 14 court appeals and numerous motions, petitions, and court hearings; five lawsuits in federal district court; Florida legislation struck down by the Supreme Court of Florida; federal legislation (the Palm Sunday Compromise); and four denials of certiorari from the Supreme Court of the United States. The case also spurred highly visible activism from the pro-life movement and disability rights groups. We don’t know how much money each side spent on the years of litigation, but it surely was an astronomical amount.
Solution: All of the litigation, attorneys’ fee, court costs and emotional trauma could have been avoided if Terri had signed a Healthcare Power of Attorney and a Living Will. In her Healthcare Power of Attorney Terri would have given her husband or one of her parents the power to make medical decisions for her. This document would have avoided all litigation between the family members because only one person would have had the legal power to make medical decisions for Terri. If Terri had signed a Living Will she would have given legally binding instructions to her doctors and the hospital that she wanted them to pull the plug and not keep her alive by machines after she became brain dead and in a persistent vegetative state. Each side spent incredible amounts of money litigating under the bright glare of national publicity, all of which could have been avoided if Terri had adopted these two very important documents while she was able.
Woolworth’s Five & Dime Stores Founder F. W. Woolworth – Failed to Update His Will
Frank Winfield Woolworth (April 13, 1852 – April 8, 1919) was the founder of F. W. Woolworth Company (now Foot Locker), the first of the “five & dime” stores. Woolworths were discount stores that priced merchandise at a nickel or a dime. FW pioneered the now-common practices of buying merchandise direct from manufacturers and fixing prices on items, rather than negotiating the price. His stores were the first to use self-service display cases that allowed customers to see merchandise without the help of a salesman. Woolworth borrowed $300 and opened his first five-cent store in Utica, New York, on February 22, 1879, but the store failed within a few weeks. FW’s second store was located in Lancaster, Pennsylvania, and it opened in 1879, but this store included merchandise priced at a dime.
In 1911, Woolworth created the F.W. Woolworth Company, which had 586 dime stores. In 1913, Woolworth built the Woolworth Building in New York City for $13.5 million in cash, which at 792 feet was the tallest building in the world at that time. The home he built in 1916 was called Winfield Hall and located on Long Island in Glen Cove, New York. The estate employed a mere 70 full-time gardeners. The 56 room mansion was staffed by dozens of servants.
When Woolworth died in 1919, he was worth approximately $6.5 million or the equivalent of 1/1214th of US GNP. The F.W. Woolworth Company owned more than 1,000 stores worldwide and was a $65 million ($804,328,215 in 2009 dollars) corporation. With such a large estate Mr. Woolworth definitely needed a good estate plan with a thoughtfully planned trust. Even though F.W. was one of the richest men in the world he was also the perfect bad example of how procrastination can hurt the people you care about most in the world.
Shortly before his death, FW asked his attorney to prepare a Will (his 1st mistake – should have created a trust) that would have divided his assets among his wife, daughters, grandchildren, friends, and charities. The new Will provided that his granddaughter Barbara Hutton would receive a nice amount of money that would have left Barbara a person of “average” wealth. Unfortunately for some of FW’s family, friends and favorite charities FW procrastinated for a long time after the Will was prepared and died without signing the new Will (his 2nd mistake – should not have procrastinated). His entire fortune ($30 – $40 million) passed to his demented wife Jennie under FW’s 1889 Will.
When Jennie died, one third of the fortune went to FW’s and Jennie’s two living daughters and the other one-third went to 10 year old Barbara Hutton, the only child of their deceased daughter, Edna, who committed suicide when Barbara was four. Because Barbara was a minor at the time, her share of her grandfather’s inheritance was placed in trust. But once she turned 21, Barbara was entitled to receive her entire fortune, outright in one lump sum (3rd mistake – leaving large amount of money to young people or people who are not good with money). See the next Section for Barbara Hutton’s bad example.
Solution: Do not procrastinate. FW sat on his second Will for a long time. He died suddenly so his procrastination caused granddaughters, friends and charities to get none of his assets.
Heiress Barbara Hutton: The Perfect Bad Example of Why You Do Not Want to Leave Large Amounts of Money Outright to Young People
Barbara Hutton was the granddaughter of the five and dime store magnate F.W. Woolworth and the niece of E.F. Hutton, the founder of the E.F Hutton stock brokerage firm. At the young age of 10 Barbara inherited $25 million when her grandfather died. The money was in a trust that was managed by Barbara’s father Frank. Frank was a stockbroker and the brother of E. F. Hutton. Frank did a great job managing the money and when Barbara was 21 the trust was valued at $40,000,000. Frank Hutton invested in assets that avoided the stock market crash of 1929.
Unfortunately for Barbara, the trust provided that all of the money in the trust be paid to Barbara when she reached age 21. Imagine a 21 year old receiving a check for $40,000,000 with no strings. $40,000,000 in 1933 is the equivalent of $628,119,528 in 2018. Imagine inheriting $628 million today and blowing all of it. Wow!
Barbara did give her Dad a nice gift of $5,000,000 for the great job he did of managing her money in the trust. Sadly Barbara went through seven husbands and all $40,000,000 over the next 46 years and died with only $3,000 to her name.
Barbara Hutton’s huge inheritance was big news. Would be boyfriends and husbands chased Barbara even before she was 21. The only husband who did not get any alimony was the actor Cary Grant. Barbara’s other husbands lived big while married to Barbara and then got big chunks of her fortune when they divorced.
How a Well Designed Trust Could Have Protected Barbara Hutton
Had Barbara’s grandfather or grandmother designed the right kind of trust, Barbara Hutton probably would not have blown through her vast fortune and funded the bank accounts of six ex-husbands. A trust can include specific provisions designed to protect the beneficiaries from ex-spouses, creditors and predators. The best type of trust for your loved ones is a trust that gives the trustee the sole discretion to determine the amount and timing of distributions from the trust.
As long as assets remain in the irrevocable trust, the assets are protected from ex-spouses, creditors and predators. That protection is lost, however, when the assets are paid to the beneficiary. Barbara Hutton’s trust is the best bad example that illustrates why you do not want your trust to require large sums of money or property to be paid to your loved ones when they are young or at any age if they cannot manage money or have creditors, ex-spouses or predators. Once the money is paid to the beneficiary, it can be wasted or go to creditors, ex-spouses or predators.
A lot of my clients include distribution language in their trusts that give children and grandchildren incentives and disincentives. Incentive provisions include cash bonuses for graduating from college and/or grad school, being employed full time, earning minimum amounts as shown on their federal income tax return or being a season ticket holder of two Arizona Cardinals tickets. Disincentive provisions that can result in postponement or loss of payments include not using drugs (may require random drug tests as a condition for receiving payments), not having a full time job, or being a season ticket holder of Arizona Cardinals tickets.
One of the most important estate planning goals of many of my clients is to adopt a trust that preserves their wealth and protects their loved ones from losing motivation. As an estate planning attorney, I am called upon to design trusts for my clients who want to provide financial benefits to their spouse, children, and other relatives, but also want to make certain that inheritances are protected from rapid dissipation by beneficiaries, as well as from outside assaults by predators, divorce settlements, and frivolous lawsuits. This is accomplished by creating a trust that contains appropriate provisions that give your loved ones life-time asset protection from ex-spouses, creditors and predators while hopefully preventing them from becoming trust fund babies who do nothing but sit back waiting for the next check from the trust.
Barbara Hutton, like everybody who gets married, could have signed seven prenuptial agreements that in theory could have protected her fortune in a divorce, but most people do not sign prenuptial agreements before marriage. Even if your surviving spouse who remarries or your child or grandchild who marries were able to get a future spouse to sign a prenuptial agreement before marriage that piece of paper is no guaranty that the ex-spouse will not get some or all of the inheritance. If your loved one rather than the trust owns the inheritance he or she may voluntarily give all or a portion of the inheritance to the ex-spouse just to make the problem go away. The only way to really protect an inheritance from an ex-spouse is with a properly designed trust that owns the assets.
We will never know how much of Barbara Hutton’s tragic life was caused by her getting $40,000,000 at age 21. What is clear to me as an estate planning attorney since 1980 is that Barbara Hutton is THE best bad example of the failure to plan.
Solution: Barbara’s grandparents should have created a trust that provided Barbara life-time asset protection from ex-spouses and predators and the trustee should have been her father while he was alive and then an institutional trust company after her father ceased to be the trustee.
Will Lynsi Snyder, the Granddaughter of the Founders of In-N-Out Burger, Be the 21st Century Betty Hutton?
In 1948, Harry and Esther Snyder created their first In-N-Out Burger fast food restaurant in Baldwin Park, California. In-N-Out has 335+ locations in California, Arizona, Nevada, Oregon, Utah and Texas. It plans to open in Colorado in 2020. The closely held company had sales of about $1 billion in 2017. Forbes estimates the privately held company is worth over $3 billion.
The Snyder’s had two sons, Rich and Guy. When Harry Snyder died in 1976, his son, Rich, took over as company president and expanded the chain from 18 restaurants to 93. In 1993 Rich died at age 41 in a plane crash. Son, Guy Snyder, then took over and expanded the chain to 140 locations. In 1999, Guy Snyder died at age 48 of a prescription drug overdose. Guy’s estate included 27 cars and other vehicles. Esther Snyder then controlled the company until her death in 2006 at age 86.
When Esther died Guy Snyder’s daughter and Harry & Esther’s granddaughter Lynsi Snyder then 17 became the sole family heir. Lynsi who never graduated from college become the President of the company in 2010 at age 27. Lynsi now controls the company through two Trusts that gave her outright ownership of one half of In-N-Out Burger when she turned 30 in 2012 the remaining one half of the company when she became 35 in 2017. Lynsi is the sole owner of the $3 billion company.
Lynsi Snyder apparently bought a $17.4 million, 16,600-square-foot mansion in the wealthy enclave of Bradbury, California, in the foothills of the San Gabriel Mountains. A Realtor.com listing for the house described it as having seven bedrooms, 16 bathrooms, a pool, a tennis court and other amenities. Lynsi loves to drive her cars in the National Hot Rod Association’s Super Gas and Top Sportsman Division 7 categories, alternating between a 1970 Plymouth Barracuda and a 1984 Chevrolet Camaro. Her third husband, Val Snyder Jr., is also a race-car driver.
We don’t know what the future holds for trust fund baby Lynsi Snyder. Only time will tell. At age 36 in 2018 she is married to her fourth husband. Will the young heiress spend her money wisely or will she waste more money than Betty Hutton was able to blow in her life? Lynsi is starting with twice as much as Betty. Too bad the trustmaker of her trust didn’t provide for an institutional trustee and that the inheritance be held in the trust for Lynsi’ s life and then the lives of her children and grandchildren.
You, Your Spouse or Your Life Partner?
Do your family a big favor and adopt an estate plan that protects your most valuable asset – your family – now, before it is too late. Don’t let your family use you as a bad example of the failure to plan because you procrastinated months and years until it was too late.
If you are the unprotected loved one then set a goal that you will ask, plead, nag, bug, harass, etc. your spouse, significant other, parent or loved one to sign a Will or a Trust that will protect you or update an out of date Will or Trust. Don’t give up until you see a signed copy of the Will or Trust and confirm that the plan of distribution is a plan that will protect you in the event of the untimely death or incapacity of your loved one.
To schedule a free estate planning consultation with one of the Keyts call our legal assistant at 480-664-7413.