This week, I have decided to take a break from our normal more technical writing and discuss some recent celebrity estate planning blunders that have come to light. Not only are these cases interesting and entertaining, but they also can provide valuable lessons when it comes to estate planning. In a previous article, I wrote about the importance of estate planning for non-taxable estates, and while the celebrity cases discussed below likely fall in the taxable estate category, the lessons are nonetheless equally applicable to a non-taxable estate.
One celebrity estate that is going through a court battle is that of the late Tom Petty. This case has been in the headlines a fair amount recently. At his death, Petty was married and had two daughters from a prior marriage. Petty’s widow and the daughters are now pitted against each other in a case regarding the interpretation of certain language contained in his trust document. The daughters filed a lawsuit in the Los Angeles Superior Court accusing Petty’s widow of improperly taking control of Petty’s music catalog, and seeking $5 Million in damages as a result.
While we do not have a copy of the disputed trust, it appears from the filings that Petty’s widow is the sole trustee, and the trust contains directions about how Petty’s music catalog was to be managed. According to the daughters, the trust directed the trustee to fund a limited liability company (“LLC”)known as Petty Unlimited, LLC with Petty’s music catalog, and stated that there was to be “equal participation” with regard to such LLC. The daughters allege that Petty’s widow set up a another LLC, Tom Petty Legacy, LLC, rather than fund Petty Unlimited, LLC as required by the terms of the trust.
At the heart of the dispute – and what may be driving both parties’ actions – is the language used in the trust, “equal participation.” The daughters have interpreted this language to mean that each person gets one vote which would mean the daughters collectively have two votes to the one vote held by Petty’s widow. In her filings to the court, Petty’s widow has accused the daughters of attempting to take over the estate through ruling by majority. Contrary to the daughters’ interpretation, Petty’s widow believes that she has control over the estate as the sole trustee.
Who is right in this case? What did Petty really mean by the “equal participation” language found in his trust? The language used and the context in which it was used a trust is open-ended and subject to multiple plausible interpretations, and both parties in this case could be correct as to what Petty really meant. The true answer to Petty’s intent may have gone to the grave with Petty, although his estate planning advisors may be able to shed some light on his true intentions. However, getting those intentions before the court may involve expensive and difficult litigation. The costs will certainly be financial, but also emotional and harmful to any relationship the parties previously had.
So what is the lesson here? When drafting estate planning documents, and all legal documents in general, the language used should be clear, concise, and unambiguous. Had Petty’s trust used more precise language to describe his intent, we likely would not be reading about this case.
Another celebrity estate that has been in the news recently is that of the late singer Aretha Franklin, the “Queen of Soul.” At the time of her death, her family members and longtime attorney did not believe she had a Will. However, in the months following her death, three handwritten documents purporting to be Wills have been found in the late singer’s Detroit home. The documents were all dated, two from 2010, and one from 2014.
Franklin’s longtime attorney filed all three documents in the probate court in Oakland County, Michigan and has allegedly told the judge that he is not certain whether the documents were legal under Michigan law. A handwritten Will may qualify as a valid Will, referred to as a holographic Will, depending on each state’s specific statute. Pursuant to Section 700.2502 of the Michigan Compiled Laws, a holographic Will is valid in Michigan if it was signed by the testator, dated, and material portions of the Will are in the testator’s handwriting.
The validity of the Wills is not the only issue at hand. If the documents are held to be valid Wills, there remains the issue of deciphering the documents and figuring out what Franklin’s intended plan was when she made the documents. The image below is a page from one of her 2010 documents, and as you can see, it is not easy to read or follow.
It will be interesting to see how this plays out in court. In the meantime, we can learn some valuable estate planning lessons from the Queen of Soul. First, a well thought out estate plan can avoid many issues that Franklin’s estate and heirs will now face. It is likely the court will have a difficult time interpreting Franklin’s documents and this may very well pit the heirs against each other causing family discourse. Having a well thought out and properly structured plan could have avoided all of this. Additionally, as we saw in Petty’s estate, when it comes to legal documents, clarity and conciseness is the way to go. Clearly, Franklin’s documents are fairly ambiguous and difficult to interpret leaving open the possibility of multiple interpretations which will likely result in lengthy and costly court proceedings.
While his death is not quite as recent as Tom Petty or Aretha Franklin, the battle of Prince’s estate is still periodically making headlines. Prince died without any sort of estate plan in place and did not even have a Will. He left an estate that was estimated to be in excess of $200 million. There are ongoing court proceedings regarding Prince’s estate that have already resulted in millions of dollars in legal fees, to the point that some of Prince’s heirs have alleged that there will be nothing left for them.
So what is the lesson? Everyone needs a Will, everyone, not just wealthy people. If you take nothing else from this article but that, this article will be successful. Had Prince had even a basic Will, his estate could have avoided all of the court battles and the legal fees incurred. Prince would have been doing his heirs a great favor with such a document. Additionally, instead of Prince getting to decide how his estate passes, the state of Minnesota will decide for him (along with a good chunk of the estate passing to the attorneys).
The estates of Petty, Franklin, and Prince are just a few examples of what can go wrong when a well thought out, unambiguous estate plan is not in place. We periodically read about celebrity estate plans gone wrong (and occasionally about well-planned estates), and while these stories may provide for some entertainment, they also can provide valuable estate planning lessons. These lessons are useful to all of us, not just to celebrities and not just for wealthy individuals. A well-prepared estate plan, whether that be a simple Will or a complex set of documents, costs much less to prepare than the costs incurred to litigate an estate dispute.