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Estate Planning Lessons From the Rich and Famous
August 2019

Aug 30, 2019 | Business Owners | Families | Today's Professionals

Whitney Houston died on February 11, 2012, leaving everything to her daughter Bobbi Kristina Brown in a trust that provided that Brown was to receive ten percent of the trust principal at age 21, twenty-five percent at age 25, and the remainder at age 30, at which time the trust would be terminated. Should Brown die before age 30, the trust provided that Houston’s mother and two brothers would inherit the remainder. Brown was 18 when her mother died, and she died four years later, at age 22.

Because Brown was a legal adult at the time of Houston’s death, had Houston not used a trust, Brown would have inherited all of her mother’s money outright. When Brown died, the money would have passed according to Brown’s will. If Brown had died “intestate” (without a will, which, given her age, is likely), the money would have passed according to state intestacy laws. In that case, Brown’s father–Houston’s ex-husband–Bobbi Brown would probably have inherit-ed all of the money, as he was Brown’s closest living relative at the time of her death. By using a trust, Houston was able to control the timing of the distributions, as well as the ultimate disposi-tion of her fortune.

A trust is a legal arrangement among three parties: the grantor (the person who creates the agree-ment and transfers property into the trust), the trustee (the person who manages the property in the trust), and the beneficiary (the person or entity who receives the benefits of the trust proper-ty). Principal refers to the property owned by the trust, and income is the money generated by the principal. The trust document names both the trustee and the beneficiary, and provides instruc-tions to the trustee as to how and when to distribute trust income and principal to the beneficiary. Trusts can be very flexible; there are many different types, and they can be drafted to reflect and give effect to your wishes.

When David Bowie died on January 10, 2016, he left an estate worth approximately $100 mil-lion. At the time of his death, Bowie was married to Iman and their daughter Alexandria (Lexi) was 15. Bowie also had an adult son, Duncan, from a prior marriage. Iman has an adult daughter, Zulekha, from a prior marriage.

Bowie left most of his estate in three trusts: 50% in trust for Iman, 25% to Duncan, and 25% in trust for Lexi. The trust for Iman provided that she was to receive income during her lifetime, but upon her death, the remaining principal would go to Duncan and Lexi. Had Bowie left Iman’s share to her outright, it would be hers to do with as she decided. In that case, she could leave it to her children and exclude Duncan. Bowie structured the trust to avoid this possibility; when Iman dies, the remainder of the trust will go to his children.

Over 225 years ago, Benjamin Franklin famously wrote, “In this world nothing can be said to be certain, except death and taxes.” None of us likes to think about, let alone plan for, the day we will no longer be here; however, it is a fate for which we are all destined. A little forethought and planning today can save your loved ones a great deal of time, energy, and money down the road.
Please be sure to take some time to review your estate planning documents regularly and have them updated, if necessary, to make sure they reflect your current wishes.

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