Posted by: Heinz Brisske
The premature death of pop star Whitney Houston should serve as a reminder to everyone to make sure that their estate plans are up to date and that their trusts are properly funded. With Whitney Houston’s death we learned that tomorrow is promised to no one, regardless of fame or fortune.
The story of Whitney Houston’s death, because she was a celebrity, highlights what should be done, what was done wrong and what was done right. It demonstrates the fragility of life, and teaches us that we need to be prepared for anything, at any time.
It is too early to say what kind of shape Ms. Houston’s estate was in when she died. But the six-time Grammy winner, who died Feb. 11 in a Beverly Hills hotel at the age of 48, had a will that names her only child, 18-year-old Bobbi Kristina Brown, as the main beneficiary, according to a family friend.
From a professional perspective, we would hope that, at the very least, a revocable living trust was set up with a trust to be funded by the estate’s assets for the benefit of Ms. Whitney’s daughter. After all, would you want your 18-year-old daughter to inherit everything in a lump sum?
After her 2006 divorce from R&B singer, Bobby Brown, Ms. Houston should have taken steps to immediately revise her estate plan. Ms. Brown is the only child from their marriage, though Mr. Brown apparently has several other children as the result of other relationships.
Divorce is, obviously, not the only event that should give rise to a review of an estate plan. Any life event, such as the birth of a child, a move across state lines or remarriage should spark an updating of estate documents. Even without such changes, an estate plan should be reviewed on a regular basis to account for changes in families and family relationships, changes in your financial situation, such as acquisition of new real estate or business ventures, and changes in estate tax and other laws. Making sure that all assets are properly titled in the name of a trust, properly allocated between trusts for a married couple, and that all life insurance policies, annuities and retirement accounts, such as IRAs, have appropriate beneficiary designations, is critical to an estate plan working the way that it was designed. It is for those reasons that Huck & Brisske, LLC established its FAMILY LEGACY PLAN™. It affords our estate planning attorneys to maintain a relationship with our clients and to review their plans on a regular, scheduled basis.
Many people are unaware that the beneficiary designation on life insurance policies, annuities and retirement accounts controls their dispostion. There are countless instances of clients who changed their plans of disposition in their wills or trusts, but failed to change beneficiary changes to coordinate with the change in their estate planning documents. Many of those situations ended in litigation; others simply resulted in unintended consequences: beneficiaries inheriting assets that they should not have received, and would not have received, if the planning had been done properly.
The planning also requires stars to make hard decisions about whom to support — and with how much — as well as how to deal with estate- or tax-planning changes that may require them to give up some control and flexibility, he said.
Details of the financial state of Ms. Houston — who signed a $100 million record deal in 2001 but also admittedly suffered with drug problems — are being closely held by the family, which buried the star Saturday. The cause of her death isn’t expected to be known for several weeks.
Regardless of its current value, Ms. Houston’s estate is expected to gain from the giant boost in song sales since her death, the August release of a movie she filmed with Jordan Sparks called “Sparkle,” all future projects involving her unreleased recordings, as well as sales from other assets, including a Mendham, N.J., mansion reportedly on the market for $1.75 million.
“There were rumors that she was broke, but that will certainly change,” according to Lynnette Khalfani-Cox, contributing editor of Moneyrates.com. “We can expect at least a seven-figure increase to her estate, maybe more.”
The hope is that she made appropriate arrangements for the transfer of those assets, in a responsible manner, to her daughter.