A recent article by CNBC discussed some details that have emerged in recent days about Robin Williams’ estate plan. As we’ve discussed now several times, the details of some celebrities’ estate plans (or lack thereof) get leaked when papers are filed publicly, often as part of the probate process. In this case, friends have come forward with information about Williams’ wishes, which lead experts to believe probate won’t be a problem.
Why no probate?
So how did Williams avoid the problem that has plagued other famous families, including the loved ones of Philip Seymour Hoffman and James Gandolfini? The reason is that experts believe Williams died without a will. Though that may seem crazy given his obvious wealth, the reason is that Williams instead created a series of revocable trusts in which he stored his assets.
How do revocable trusts work?
Revocable trusts are commonly used among those with a relatively high net worth because they allow the family to avoid the probate process. This can not only save time and money, but it avoids having private information divulged publicly. Revocable trusts can be created where a person names him or herself as the trustee, allowing them to maintain control while they are still alive. The person also indicates how they want their assets managed or distributed after their death and, when they die, the whole thing happens outside of public view.
What did Williams do?
Those familiar with Williams and his family say that the famous actor created a series of revocable trusts to provide for his three children. The trusts were designed so that his estate would be distributed to his children in three installments: once when each child turns 21, then again at 25 and finally at 30. Experts say this kind of distribution scheme is fairly standard and likely the result of relatively little advanced planning.
What issues does the plan create?
Though estate-planning experts have said Williams deserves credit for taking the time to create an actual estate plan, something that many other famous celebrities never bothered to do, Williams could have done more. The revocable trusts are a good way to manage assets and keep private details out of the spotlight. However, the distribution system in place may not actually be best for the kids. For one thing, given the amount of money Williams is estimated to have left behind (somewhere north of $80 million), it means the kids stand to inherit millions of dollars when they are only 21. This kind of immediate wealth can lead to all sorts of problems by dropping too much responsibility on someone not yet mature enough to handle it.
Rather than simply hand over piles of cash according to a fixed distribution timetable, experts say a better system would have been to keep the money in the hands of a trustee but allow the children an increasingly greater say in who the trustee should be. By giving the kids the right to choose the trustee, they have the option of naming someone who will let them draw down assets and spend more freely while still keeping watch over the nest egg. This kind of structure is better designed to ensure the children are financially secure for life.
An experienced Minnesota estate planning lawyer can help walk you through the complicated process of establishing a workable estate plan. For more information on estate planning in Minnesota, along with a variety of other topics, contact Joseph M. Flanders of Flanders Law Firm at (612) 424-0398.
Source: “Robin Williams’ estate plan: Good, but not great,” by Kelley Holland, published at CNBC.com.
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