An often-overlooked component of a comprehensive retirement plan is an estate plan. Most people are still employed when they begin their planning, and they see retirement as the next step in life’s journey. As I used to tell clients, however, “while I want to bet for you, not against you, it’s still important to consider what happens if you don’t survive to retirement.”
The tragic recent death of Tony Hsieh, the 46-year-old former CEO of Zappos, reminds us of the importance of estate planning. He left behind an estate reported to be worth an estimated $840 million and documents filed on behalf of his family said they are “unaware of the existence of a fully executed estate plan and have a good faith belief that the Decedent died intestate” – which means there was no will in place.
The deaths of famous and wealthy people are as terrible as anyone else, and because of their star power, a light is shown on their legacies and the estate planning issues that can arise. There are lessons to be learned that remind us of the importance of addressing estate topics as part of our own holistic planning.
Dying Without A Will
Some of the more famous recent intestate deaths are those of Prince and Aretha Franklin, and, most recently, Tony Hsieh.
Prince’s well-documented estate problems continue to this day, more than four years after his death. In addition to navigating the interests of several different parties, his estate must also wrestle with the business and legal details of his massive musical output.
Aretha Franklin’s estate issues have largely concerned family. While some commentators originally claimed that she really didn’t need a will since her four adult sons would inherit equally, it quickly devolved into a more complex situation. First, the lack of a will quickly led to assertions that documents found in her couch were proof that she did indeed have a will. Further, one of her sons has special needs, and so it’s not just a matter of giving each child the same check and being done with the estate. More recently, the estate has also fallen into turmoil over accusations of gross mismanagement, resignation of the executor, and a host of other problems.
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In the case of Tony Hsieh, it is reported that his father and one brother have asked for an order to access his accounts and protect his assets. His mother and other brother were listed as next of kin. We hope this all works out smoothly for the family, and it’s reasonable to assume that, like most people, Hsieh would want his loved ones to get along, even after he is gone.
Forms Don’t Fix Families
forms don’t fix families
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To the extent that having a will helps facilitate the process of post-death family harmony, it’s a smart idea to get one drafted. From a planning standpoint, however, it’s important to realize a legal document isn’t a cure for family friction. We saw this occur after the deaths of both rocker Tom Petty and actor Alan Thicke.
When Tom Petty died unexpectedly at age 66, he had an estate plan. He had named his widow as the sole trustee of his estate, which includes publishing rights to his catalog of music. Petty’s wishes were that his wife seek input from Petty’s daughters for how the estate was to be managed. Although the estate battles that ensued were ultimately settled, it happened only after a very public and costly clash between the daughters and their mother over the meaning of the word “equally” in the estate documents.
Alan Thicke died after a heart attack suffered while playing hockey with one of his sons. He had a trust set up with his sons as co-trustees, but the estate quickly devolved into a public battle between them and Thicke’s widow. While the battle has apparently been settled, tensions reportedly remain.
The lesson learned is that estate planning can’t be done in a vacuum, and even with seemingly well-drafted documents, the risk of a family feud still exists. Good estate planning requires attention to the human element as well.
No News Is Good News
The high-profile estates that turn sour make for good copy while the estate plans that work don’t get much attention. However, to the extent we can get details on the plans that worked well, they provide positive lessons. A classic example is the Walton family of Wal-Mart fame. This family has maintained its billionaire status in part through effective estate planning begun by Sam Walton in the 1950s. Through the use of grantor retained annuity trusts (GRATs) and other perfectly legal estate tax savings techniques, the family has kept its estate and gift taxes under control and further built their wealth throughout the generations.
In creating estate plans, celebrities often have other issues in mind beyond just taxes. Robin Williams’ unexpected and young death as a result of suicide is tragic, and his estate hasn’t been without its challenges. His estate planning, however, will likely accomplish one of his goals – to control his publicity rights after death. Williams was protective of his publicity rights while alive, and because of careful work with his attorneys, he appears to have accomplished the same post-mortem. His trust prohibits all commercial use of his publicity rights for the next 25 years, and then gives ownership of his likeness to the Windfall Foundation, a nonprofit corporation focused on the arts and humanities.
Most notable are the estates we never hear about. Names like Steve Jobs and Burt Reynolds were big in life, but why do we not hear anything about their estates? Because of good planning. Through wills, trusts, family conferences before death and a myriad of other estate planning techniques, it is indeed possible to keep family affairs private after death.
We hope our life’s path includes succeeding in our chosen careers and then enjoying the fruits of our labor in retirement. This is so important that many of us initiate retirement planning while we are still working. Life, however, doesn’t always work out as planned, and death can occur before there’s a chance to retire. As a result, it’s wise to include estate planning as part of your comprehensive retirement plan.