This artice was published on DailyFinance.com August 14, 2014.
The life of comic genius Robin Williams brought joy to millions of fans, and his tragic death has sent shock waves throughout the entertainment community. But as painful as his loss will be for family, friends and fans, it appears that at least according to early reports, Williams took care of business when it came to setting up a solid estate plan.
Keeping Private Affairs Private
Celebrity estate planning is often bungled, and the errors get magnified both by the large sums involved, and the fact that their deaths play out on the same public stage that they lived their lives on. (Think of Philip Seymour Hoffman, for example.)
Despite having a wealth of advisers, many wealthy entertainers fail to prepare adequately to handle the transfer of their real wealth after their death. Williams, however, apparently used at least one revocable trust for the primary portion of his estate planning, and that will likely be adequate to avoid some of the complications and tax liabilities that other celebrities’ families have had to endure.
Most people think of wills as the basic must-have estate-planning document. But for those in the public eye, the downside of using a will as your primary document is that it’s subject to the probate process, which invites public scrutiny of court-filed records. Especially in California, where Williams lived, the probate process is notorious for being long and arduous.
By contrast, revocable trusts enable people to arrange for the disposition of their assets after death without any involvement from a probate court. And, the public has no right to see the trust document. It’s possible that we’ll never know for sure what any trust that Williams created said. Because trusts keep personal business out of the public eye, even family members who disagree with each other can choose to resolve disputes privately, if they choose. That can avoid the negative publicity of will contests and keep arguments from escalating.
Is a Revocable Trust Smart for You?
Apart from the different procedural requirements, revocable trusts also give you the ability to control how and when your loved ones will receive your assets. For instance, in many cases, parents arrange to have money held in trust until children reach a certain age at which they believe they will be able to responsibly manage their finances. These provisions allow trusted advisers to act as trustee and handle financial matters during the early part of children’s lives, and they ensure that children don’t squander their inheritance quickly and find themselves with regrets later in life.
In addition, revocable trusts can give you flexibility in making changes to your estate plan as needed without necessarily having the same level of formality that a will involves. Given that Williams was married three times and had children from different marriages, making sure that his estate planning was rock solid in the face of changing circumstances was particularly important. Sometimes, families will break up into factions following a death, and arguments can become contentious when the estate plan isn’t perfectly clear.
The downside of a revocable trust is that it tends to be more costly in terms of upfront fees than a simple will. However, unless you live in a state whose probate process is relatively simple, the extra cost in preparing a trust often pays for itself in not having to hire an estate planning attorney or pay court costs associated with probate proceedings after death.
Posted by Wayne McLeod on Living Trusts