Three specific issues are notable from Mr. Williams’ Estate Plan. It can be safely said that these specific issues, that arose as a result of common mistakes in Mr. Williams’ Estate plan, are likely contrary to the intentions of the late legend, who went to great lengths to ensure his affairs were in order for his untimely departure.
1. Non-Specific Bequests
A fact well known to all media readers is that there is an ongoing legal battle between Mr. Williams’ children and his third wife with relation to specific items of Mr. Williams’ tangible personal property. The term “tangible personal property”, as used in estate planning, means everything that you own that you can feel, separate from real estate, including your books, trophies, artwork, jewelry, clothes etc. The reason that Mr. Williams’ third wife and children are fighting over items of Mr. Williams’ tangible personal property is likely because Mr. Williams’ trust was not specific enough when it came to sentimental items of personal property that his family member’s would each hold dear in memory of Mr. Williams. It does not appear to be a fight about the actual monetary value of each item.
This courtroom battle may have been avoided had Mr. Williams’ trust been more specific in terms of who would be getting what tangible personal property. One can draft “schedules” of personal property, identifying the specific property and the person who would be receiving such property. This often takes away any ambiguity over who would get what of sentimental value, in these emotionally charged situations, following the loss of a loved one. Also family discussions prior to the loss of the beloved family members can often help in avoiding these courtroom battles.
2. Routine Age Distributions.
According to the information available online, the trust that Mr. Williams set up for children called for generic, unspecific age distributions for each of his children. What this means is that his trust called for distributions to his children in one third amounts on their 21st, 25th and 30th birthday. This method of distributing inheritance is generic, non person specific, and generally is incorporated into the trusts due to it’s popular trend, without taking into consideration the individual attributes of the heir that would be receiving bulk sums upon reaching any of the latter ages. In short, this method of distribution has been in the past, troublesome for the immature heir of 21, and indeed 25 and sometimes 30. Mr. Williams’ estate was without a doubt exceptionally sizable and rightfully so, as a successful, hard working public figure. It begs the question whether Mr. Williams was advised to take into consideration the various personalities of his children in deciding to implement the generic age distributions.
To ensure a successful estate plan, it is exceptionally important to take into consideration the personalities and chosen lifestyle habits of young heirs, in deciding how and when, if ever, they will receive outright funds. There are many other trust mechanisms that can be utilized for the protection of the young person who is heir to a sizeable amount, which can diminish the chances of the wealth being squandered on frivolous pursuits attributed to immaturity. One should not be concerned that should they choose an age distribution different to the norm of 21, 25, or 30 that their heirs would be left in need of monies to fund their lifestyle. The reason for the latter is that many trusts include the provision that allows distributions to be made before and between the distribution ages for “maintenance, education, support & health”. Including this trust provision ensures peace of mind for the trustor, that should they choose a distribution age of 30, that their heirs would have access to funds for reasonable living expenses, education and healthcare. With that in mind, by choosing a later distribution age, your heir will want for nothing.
Aside from the factors of immaturity, bad lifestyle habits and the associated risks with large inheritance, Mr. Williams’ trust did not appear to provide any protection for his children’s inheritance from creditors, bankruptcy or divorces. Mr. Williams could have provided extra protection for his children against lawsuits, divorces, bankruptcy or other type of creditors by leaving the distributions in lifetime asset protection trusts that his children could have controlled as co-trustees or trustees. Instead, they will receive the funds outright at 21, 25 and 30 ensuring that the funds run the risk of depletion from creditors.
3. Privacy Loss:
As previously stated, Mr. Williams had in place a trust, among the many benefits of which are avoiding Probate and maintaining privacy. Why is it that contents of Mr. Williams’ two Trust documents have been the subject of discussion online for the past couple of weeks? The simple answer is that Mr. Williams’ trust was incomplete.
Mr. Williams trust document names two co-trustees. Mr. Williams’ trust documents did not identify what would happen or who would replace a co-trustee in the event that one passed on. Unfortunately for the privacy of Mr. Williams’ family, the latter happened, leaving the surviving trustee with no choice but to go to court to ascertain who would be the successor trustee. Upon an application seeking an order being made to the court, the trust documents became a matter of public record. The latter ensured that anybody, be it the curious individual, the tabloid news reporter, the inheritance seeker could quite easily find out, how much and when Mr. Williams’ heirs, would inherit.
Mr. Williams’ loss of privacy could have been avoided, if he had:
(1) Named a trust advisor, who had the power to choose a trustee in the event another trustee became unable or unwilling to act.
(2) Specified what would happen, upon the death of another trustee and name successor trustees, who could act upon the death of the original trustee.
In sum, there are great lessons to be learned from Mr. Williams’ estate planning deficits. Mr. Williams’ estate plan deficits highlight that even with the best intentions for leaving one’s affairs in an orderly fashion, with the intent of providing in the best possible ways for heirs, mistakes can and do happen. It is wise to make all of your concerns for your heirs known to your estate planning attorney. Upon putting together an estate plan, it is also wise to decipher whether there are items of personal property that could cause a conflict between heirs to ensure that specific bequests are incorporated into the estate plan. The latter is essential not only to remove the possibility of conflict following one’s death, but also to ensure that the trust is kept out of the courtroom and out of the public’s watchful eye.