Don’t make these estate planning mistakes, and instead learn from the mistakes of the rich and famous. You can be sure an estate battle will erupt when you leave your kids our of your will, intentionally or otherwise; or if you don’t have a will that adequately deals with your estate.
Estate Planning Mistakes: Complicated Family, Basic Will
Author Michael Crichton left behind four wives, two children and a will that wasn’t clear about his intentions or his enormous estate. When he died in 2008, the author left behind two unpublished books and one real mystery: Will his widow be able to gain control of a substantial part of his estate against his wishes? Crichton’s mistake was having a complicated family, a large estate and a basic will that wasn’t updated regularly.
HarperCollins agreed to publish both novels as part of a $30 million book deal Crichton signed in 2001.
But the prolific Crichton, who was married five times and also created the hit TV series ER, which ended a 15-year run in 2009, left behind another, even bigger piece of unfinished business: the fate of a son born three months after the author died. The son, John Michael Todd Crichton, isn’t mentioned in Crichton’s will, but he may nonetheless be entitled to one-third of the writer’s estate. The amount at stake is not known, but may well reach into nine figures: By one account, Crichton earned $100 million a year in his prime.
In a dramatic twist worthy of Crichton himself, his widow—Sherri Alexander Crichton, who signed a prenuptial agreement limiting her share of the estate—is seeking to be named guardian of her son’s property. Success would essentially let her circumvent the prenuptial pact.
Crichton had only one other child, a daughter named Taylor Anne Crichton, whom he had with his fourth wife, the actress and screenwriter Anne-Marie Martin. Taylor is named in Crichton’s will, unlike her younger half-brother.
Crichton’s will consists largely of standard boilerplate language, but there are also some pointed instructions aimed squarely at his legion of ex-spouses. The first paragraph, for instance, makes clear: “I have intentionally omitted to provide for Anne-Marie and my other former spouses under the terms of this will.”
Later on, there is a reminder of the prenuptial agreement he signed with Sherri in April 2005, and Crichton instructs his executor “to be bound by the terms” of that deal.
But what of the children? Taylor, named in the will, is also listed as one of the beneficiaries of the private trust. What she will get is anybody’s guess. But as a child of the deceased, John stands to collect a substantial slice of his famous father’s fortune. It may not be what the author wanted, but because he failed to address his son in his will, the final decision is likely to be made by the court.
It is entirely possible that Crichton never got around to changing his will—which was last amended in October 2007—to address his second child. The law in California and many other states provides for this circumstance, leaving a way for a child born after the signing of a will to claim his or her inheritance as if the parent had died without an estate plan.
“In order to leave your kid out, you have to consciously make that decision,” says Kenneth S. Wolf of Hoffman Sabban & Watanmaker of Los Angeles, a firm that specializes in estate planning in California.
To make her case for control of her son’s share of the estate, Sherri Crichton appears to have a good case. Wolf, for one, described the “incontestability” clause as “a pretty standard clause,” and one drafted in 2007, long before the infant was born and thus not obviously intended to exclude the boy.
Estate Planning Mistakes: Blended Family Don’t Agree on the Will
The widow of former U.S. Senator Fred Thompson has asked a court to dismiss a claim filed against his estate by his two adult sons, saying their allegations of misconduct are a “gross misrepresentation.” Attorneys for Jeri Thompson filed the motion for summary judgment, insisting that she never “conspired” with a prominent Nashville law firm to reconfigure the former senator’s estate.
“No such conspiracy took place,” the motion declares. “Senator Thompson made no changes to his estate planning documents prior to his death.”
It says that Jeri Thompson, as executor of her husband’s estate, “made one change — a change to a contingent beneficiary designation on two term life insurance policies. That change had no effect on the rights of Plaintiffs, because they were not primary or contingent beneficiaries of the policies, either before or after the change.”
Fred Thompson’s two adult sons from his first marriage, Tony and Dan Thompson, filed the lawsuit last week against Jeri Thompson and the estate.
The lawsuit accuses her of exercising “undue influence” in a flurry of last-minute changes to the estate. Their suspicions appear to have been aroused by a bill showing $40,000 in legal work done on behalf of Thompson’s estate in the month before his death.
In the latest filing, Jeri Thompson said that the only change was to add their youngest son, Samuel, as a 50 percent contingent beneficiary along with his sister, Hayden.
Jeri Thompson was and remained the 100 percent primary beneficiary on the policies, the motion says.
As a result, she “received 100 percent of the net death benefit of the policies — just as she would have if the change never had been made,” the motion states.
“Plaintiffs cannot show that they incurred any harm or loss that was cause by any action of Executor.”
The motion includes copies of insurance documents showing those changes — changes that, according to the lawsuit filed by the two adult sons, Jeri Thompson had previously been unwilling to share.
It’s a common scenario – children from the first relationship disagree with the new spouse and new children on how the assets should be divided. Worse, there are occasions where the children from the first relationship have been left out of the will altogether.
Estate Planning Mistakes: Dying Without a Will
Anton Yelchin’s parents have filed court documents indicating the Star Trek actor died without a will and left behind a nearly $1.4 million estate.
Court records show Victor and Irina Yelchin filed to become administrators of their son’s estate on Friday in Los Angeles Superior Court. The actor died on June 19 when he was crushed by his Jeep Grand Cherokee in the driveway of his Studio City home.
The filing states Yelchin left behind at least $641,000 in personal property and had $731,000 in equity in his home. Although this is not a massive estate by Hollywood standards, an attorney representing Yelchin’s parents announced they are planning to file a wrongful death lawsuit against Fiat Chrysler, which made the Jeep that killed their son. This means that the estate could receive a substantial payout.
It is likely that because he had no spouse or children that his estate will be received by his parents – but dying without a will means that his estate is subject to the laws of that jurisdiction.
These examples prove that even the rich and famous often fail to prepare for death, leaving behind lawsuits and chaos for their families. To prevent this, contact us for your estate planning needs. We offer a free, 10-minute phone consultation.