Lou Reed, lead singer and guitarist for the group The Velvet Underground, died after a long battle with liver disease late last year at the age of 71.
As a celebrity who valued privacy, little was known at the time about his financial condition, net worth or estate planning decisions. That’s all changed now that a series of recent probate court filings were made public in New York. These probate court filings illustrate important points about Minnesota living trusts.
After the documents were released, reporters have been able to comb through and discover juicy details about the famed musician’s financial health and his last wishes for how his loved ones would be taken care of once he passed away. Beyond all the juicy details, most estate planning experts say they are most surprised that Reed failed to use a trust to manage the disposition of his assets rather than a will, which resulted in such a public spectacle.
The details and why a living will is important
After the recent filings were made with a Manhattan probate court, reporters quickly discovered that Reed’s estate had earned an impressive $20 million since he passed away in October of 2013. This $20+ million came from the sale of copyrights, publishing and performance royalties and other lucrative deals put together by his team of financial managers.
Reed’s longtime manage, Robert Gotterer, serves as one of two co-executors to his estate and is largely credited with the wise financial decisions that have allowed Reed’s net worth to expand so quickly after his death. In addition to the $20 million earned since October, Reed’s estate already controlled assets and property worth more than $10 million. Another $500,000 was set aside for his sister to use as she wished to care for their 93-year-old mother.
Other details contained in the documents reveal that Gotterer and the other co-executor received $220,000 in fees for their work. Though the amount may seem hefty, it’s small potatoes compared to the amounts demanded by executors in other high profile cases, including those who handled Michael Jackson’s estate that have walked off with tens of millions of dollars.
How do we know?
At this point, you might be wondering how on earth reporters were able to dig up so much dirt. Usually, guesses about a celebrity’s net worth are just that, guesses. The above information is precise, down to the penny. The reason is that Reed bizarrely chose to manage his estate exclusively through the use of a will. The 34-page document was signed in 2012 and covered the disposition of his assets and other wishes and appears to have worked quite well. The only problem? Privacy.
When you die is your information public?
Though wills are incredibly useful documents and are able to appropriately accommodate the wishes and requirements of almost any estate, they come with some important downsides. In this case, Reed’s family is currently experiencing the problem that comes when public probate documents are made public.
Had Reed employed other means of estate planning, especially a revocable living trust, then none of the information that is currently making headlines would be publicly available. That means no one would know how much money was left to his wife or sister. No one would know about the value of his real estate holdings and no one would know how much the executors of his estate were earning.
The reason is that wills must go through the probate court system, which is a public process. Eventually, the details of wills can be made public, exposing a family to far more scrutiny than they may be comfortable with. Trusts, on the other hand, avoid probate court and, in so doing, shield families from the public glare.
Though wills are wonderful things, it is important to understand the pros and cons associated with their use. In some cases, it can be worthwhile to explore more complete estate planning options to be sure your plan achieves your goals.
Living trusts are flexible vehicles that can prove extremely useful in certain circumstances. An experienced Minnesota estate planning and trust lawyer can help walk you through the complicated process of establishing a living trust. 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: “Lou Reed Walked On The Wild Side With His Estate Planning,” by Andy Mayoras, published at Forbes.com.
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