1. Review Your Estate Plan Upon Change in Circumstance
Upon Mr. Walker’s death, the public probate procedure made it common knowledge that Mr. Walker was worth about $25,000,000.00. Mr. Walker’s trust’s sole beneficiary was his daughter, a young teenager upon his passing, who is set to receive all of his wealth. In 2001, when Mr. Walker put together his Estate plan, it is unlikely that he was worth $25,000,000.00. Mr. Walker’s acting career progressed exceptionally over the last 15 years and consequently his net worth increased significantly. Had Mr. Walker reviewed his estate plan as his wealth grew, perhaps he would have added beneficiaries, loved ones of his who would stand to benefit from the great wealth.
At the time of death, Mr. Walker left behind his longterm girlfriend of 7 years, whom he started dating post 2001. Given the speculation that marriage was in the future for the couple, it is likely that Mr. Walker would have liked to provide for his girlfriend in the event of his passing. Had Mr. Walker’s revisited his estate plan upon the changing of his own circumstances, Mr. Walker would have had the opportunity to ensure his girlfriend was provided for.
At the time of his death, Mr. Walker’s estate was worth significantly above the federal exemption amount. This ensured that Mr. Walker’s estate was heavily taxed, paying over $5,000,000.00 in taxes, diminishing the inheritance for his chosen beneficiary. Had Mr. Walker revisited his estate plan upon the increase of his wealth, he would have had the opportunity to incorporate various trust mechanisms designed to minimize the taxable estate upon death.
2. Always Fund Your Trust
Mr. Walker was clever to recognise the many benefits and execute a revocable living trust. One of the many benefits of having in place a revocable living trust is that when you have titled all of your assets, real estate, bank/brokerage accounts and personal property into the trust, the probate procedure can be avoided, thus ensuring privacy for the deceased and his loved ones. Probate is the legal process of administering the estate of a deceased person, resolving all claims and distributing the deceased person’s property under a will. It is a public, lengthy and costly procedure and, more often than not, better avoided. Unfortunately, people oftentimes establish a trust instrument but fail to title their property over into the trust. When assets exist outside of the trust, worth $150,000.00 or more, probate will have to be filed, rendering many of the benefits of the revocable living trust redundant. Because Mr. Walker failed to relook at his estate plan and title additional assets to the trust, Mr. Walker owned assets outside of the trust worth well above the $150,000.00. As a direct result of Mr. Walker’s failure to fund the additional assets into the trust, probate was filed, his net worth and chosen beneficiary became public knowledge and his estate was subject to depletion by the many avoidable costs associated with probate.
3. Plan Early
Mr. Walker put together his estate plan when he was 28. Alot of people are under the common misconception that estate planning is only for the elderly and something to be approached when the likelihood of death increases. Mr. Walker is to be admired for his proactiveness in putting in place a plan. No doubt, at 28 Mr. Walker did not think that death was imminent. Had Mr. Walker taken the attitude that estate planning is for the elderly, he would not have missed the opportunity to name a guardian for his daughter, choose his ultimate beneficiary and put his sizable wealth in trust for his daughter's benefit.
4. Name a Guardian for Minor Children
Mr. Walker was clever to appoint his parents as guardians for his minor daughter. Although the court generally prefers custodial parents, resulting in Mr. Walker’s daughter residing with her natural mother, it is always helpful to name your chosen guardian for your minor child. Should something happen to Mr. Walker’s daughter’s natural mother, rendering her incapable of caring for her minor daughter, the court will have clear instruction as to who should have custody of the minor child.
While Mr. Walker must be commended for having in place an estate plan, his estate plan acts as a great example that estate planning should be viewed as a journey, not something to do once and walk away from.