You need to make sure your Will is up-to-date. Philip Seymour Hoffman (PSH) didn’t and it may cost his family US$15 million!
At the time of his death PSH had a Will. But it was written in 2004 and at that time he only had one child.
He included a trust for this child in his Will, with very specific directives on: how the trust money was to spent; where the child would live; what education the child should receive; even which countries he wanted them to visit, etc.
So what went wrong?
Complex Trust Structure: At the time of his death, PSH had 3 children. His Will was out-of-date and did not mention the other two children. In addition, the complex trust structure did not contemplate the possibility of other children or provide for them. Which was clearly unfair.
No Estate Planning: Incredibly, PSH had not checked out the tax implications of passing on his considerable estate. The main tax issue was that he was not married to his partner and mother of his children.
As a result, his partner is facing a possible US$15 million tax bill on the estimated US$35 million value of his estate. His oldest son may inherit most of his estate to the exclusion of the rest of the family. And costly litigation is now eating up assets of the estate in trying to rectify the situation.
All of which could have been avoided
This could all have been avoided by writing a clear Will and keeping it up-to-date with your current situation, family and assets. Plus getting some good tax advice.
The PSH news should remind us all of these simple guidelines:
- Write a Will. This helps ensure your estate is divided in the manner you wish.
- Make sure your Will is up-to-date. Any minor amendments can easily be done with a Codicil.
- Keep your Will clear and simple. The more complex you try to make it with numerous complex trusts, conditional gifts, etc. the more likely it will be contested.
Your passing is be difficult enough for your family. Don’t burden them with the additional costs, delays and stress of a complex or nonexistent Will. Remember, litigation costs normally come out of your estate and can easily eat up any gift or benefit you wanted to bestow. And if you start trying to exclude family members that would otherwise have a right to claim, you may leave your family in the same shoes as PSH’s partner – with a mess and losing half of the assets to litigation and taxes.
If you have a complex situation with mixed families, former wives, shared partnership in businesses, overseas property or assets, it’s recommended that you do seek estate planning assistance. But if your circumstances are more straightforward it’s very simple to write a Will – and you don’t need a lawyer.