If you read about celebrities, you can’t help but learn something about wills and estates. Their cautionary tales could fill a whole textbook.
Eight years after Prince’s death, the fight over his estate is back in court, and famous “Basic Instinct” actress Sharon Stone just made headlines by saying that $18 million of her savings were lost when she was sick and in danger of dying more than 20 years ago.
It’s always in the news that Jay Leno has filed for conservatorship over his wife Mavis, who has dementia. There are also ongoing stories about Brian Wilson and Britney Spears.
Celebrities are good examples because when most people hear about one of these situations, the first thing that comes to mind is, “Shouldn’t they have known better?”
People who are famous, wealthy, and have a team of advisors, managers, agents, and other business-minded people around them should be able to handle the day-to-day tasks of life. They should at least want to keep their business private by using trusts and cleverly named LLCs. That way, no one can find out how much money they have or don’t have.
But Michael J. Greenberg, an estate lawyer in New York who runs his own firm, said, “a lot of wealthy, smart people don’t do estate planning.”
It’s clear that no one is immune to problems when famous people have them. Behavioral finance experts say that people don’t plan their estates because they are too sure of themselves. This can help you get started on your own plan. This is your brain telling you that bad things are not going to happen right now. It’s called overconfidence bias. You are aware that we need to make a will and a power of attorney, but that can wait until later. You have plenty of time since you are 45 or 60 years old.
“Our bodies make us think in short-term terms.” Vic Ricciardi, a visiting finance professor at Ursinus College and co-author of the book “Advanced Introduction to Behavioral Finance,” said, “People say, ‘I’ll worry about it when it happens.'”
However, most problems with estate planning happen after the fact, when it’s too late. For example, look at what Sharon Stone said. This came up in a small part of a bigger interview with the Hollywood Reporter about her career and how she stays strong. In 2001, when she was at the height of her fame, she had a stroke and was very sick for a while. She didn’t work again for seven years. In the meantime, other people had to take care of her business, which didn’t go well, according to reports.
“Because of all my success, I had $18 million saved up, but when I checked my bank account again, it was empty.” “Everything, like my fridge and phone, was registered to other people,” she said.
It’s important to remember that planning for incapacity can be more important than planning for death, even though wills are often seen as the most important part of estate planning. Imagine coming out of a very bad illness and finding that you have no money left.
To put it simply, you wouldn’t care if you were dead. But if you’re still alive and trying to get your life back, it will matter a lot.
Stone didn’t say more about her situation, but it’s common for power-of-attorney relationships to go wrong when someone is sick, and the whole thing ends up in court. Greenberg said that what Stone said sounded like typical power-of-attorney abuse. This type of abuse can happen even if the abuser is married and even if investments are lost.
“You can sue them and say they should have done a better job.” “This takes place all the time,” Greenberg said.
Every year, the National Guardianship Association puts out a book that is a legal review of U.S. cases that have been appealed. There are a lot of stories like this one where someone who was supposed to be in charge of someone else’s money is criticized for not doing a good job, usually by a family member. If it makes sense, a judge will look at the evidence of the decisions that were made and then change who is in charge going forward.
The courts can step in because someone with power of attorney should only handle someone else’s money in a way that is fiduciary, which means that the person is supposed to act in the best interest of the other person. But it’s also common to think too highly of other people and their job skills. Some people are evil, and some are just not up to the job.
But if you have power of attorney, you are responsible for what you do, especially if a court has given you that power. You need to keep records and write down transactions. If someone doesn’t like how you’ve handled things, the person you’re helping, if they can, or a judge can take your place.
There is usually some kind of long-term incapacity that leads to fights over power of attorney. These fights then turn into fights over estates after the person dies. Stone, on the other hand, was able to get better and take care of her own business afterward. The interviewer asked her why she chose to just pick up and go.
“Now I live for happiness.” “I have a reason to live,” she said.
Who gets to make decisions about money is also at the heart of the current Prince case. Prince died in 2016 without leaving a will, and since then, his siblings and other people with a stake in the matter have been fighting. The most recent fight is over who gets to run a business that was set up to handle his music rights.
Prince may have lived forever as a rock god, but as a person, he was not unbeatable. He could have saved his family a lot of stress, legal fees, and attention about their legal problems if he had set up a trust or some other legal structure for his estate before he died.
