What do Prince, Frank Sinatra Jr., Jose Fernandez and Tom Clancy have in common beyond the fact that they were famous and each died in the last few years?
All four left their multimillion-dollar estates in a mess.
Now the heirs and would-be heirs are trying to sort out what they are entitled to and judges are trying to determine what the heirs of the ultra-wealthy benefactors have a legal claim to.
William W. Sleeth III says most of the headaches these four created could have been avoided. Sleeth is a partner in the national law firm of LeClairRyan and the leader of the firm’s estate and trust litigation team.
“Litigation over money is a long-running trend that continued in 2016 as people continued to die and families continued to fight over the estates,” he says. Famous people, like those named above and comedian Robin Williams, receive the publicity when their estates end up in court, but their cases can serve as a learning experience for all wealthy people, he says.
The first rule in avoiding estate problems is to always have a will and estate plan in place no matter what your age and put it in a place where people can find it, Sleeth says. Singer, songwriter and musician Prince was a relatively young 57 when he passed away in April 2016. He had hundreds of millions of dollars but no will. No one knows why the meticulous music legend failed to plan in this one key area—maybe he thought he was too young to worry about these details—but the estate planning void prompted would-be heirs to appear from everywhere after his premature death.
“Prince was very sophisticated when it came to protecting his property rights for his music, but not for his money,” Sleeth says. Some 30 people claiming to be Prince’s “love children” appeared to claim parts of the estate, creating a battle that is still dragging on. It seems Prince’s younger sister and five half-siblings are the heirs, but the case is still unresolved. This case “underscores what is probably the most obvious lesson that I repeat time after time: Enact an estate plan and put the instruments in a place where people can locate them upon your passing,” Sleeth says.
The second rule, he says, is to hire good attorneys and listen to them. Singer and songwriter Frank Sinatra Jr. did things his way, like his famous father, instead of looking to experts for advice, Sleeth says.
Sinatra and his wife, Cynthia, were divorced but did not separate. They continued to live together as husband and wife for years, giving Cynthia the impression that she was a common-law wife and that she was entitled to benefits while he was alive and to an inheritance when he died. But only a handful of states recognize common-law marriages as legally legitimate entities.
The two were already involved in litigation before Sinatra died of cardiac arrest in March at the age of 72 while on tour in Daytona Beach, Fla. The litigation continues.
“Sinatra Jr. could have avoided this mess in large part by having been more careful with his decisions and actions, chiefly by consulting with and listening to his attorney,” says Sleeth. “People need to be extremely careful that their actions don’t give their lover, or maybe a child who feels like he or she has been adopted, a basis to claim that the parties had a common law marriage or agreement.”
Rule number three is be sure to make written provisions for those you want to take care of. In September, Florida Marlins pitching ace Jose Fernandez died at the age of 24 in a boating accident off the coast of Miami Beach, Fla. He was unmarried, but his girlfriend, Maria Arias, was pregnant.
For the estate, worth millions, to take care of Arias, or at least the child, the couple would have needed to be married or Fernandez would have had to put money in a trust for the mother and child, or at least agreed in writing to give them a certain amount.
This case has not been challenged, but Sleeth says, “the scenario has all of the classic signs of what could make for a dispute.”
Fernandez may very well have wanted his girlfriend and child to be supported by his estate, but having a verbal agreement that a certain person is to receive a given amount, or an heir is to receive a particular valuable item or keepsake, is not enough, says Sleeth. The courts will not honor the promise unless it is in writing.
The fourth rule applies to the case of author Tom Clancy, who was worth $80 million dollars when he died in 2013, according to Sleeth. In the case, which has been litigated in court in the years following the author’s death, Clancy had an estate plan for dividing the money between his second wife and his two sets of children. He also stipulated who should pay the taxes on the inheritance.
Shortly before he died, he signed an ambiguous codicil to the will, which led the courts to redistribute the multimillion-dollar tax bill among the children. But the case has been tied up in court because some of the children are now challenging the interpretation of the will. Which leads to the fourth rule: Any changes in an estate plan need to be made by someone with extensive experience in estate planning so that no ambiguities are written into the document.
“The moral of the story is that estate planners need to be very careful about language that could arguably be construed as ambiguous,” Sleeth warns. “With an estate in the tens of millions, it was almost certain that all of the parties involved in Clancy’s estate would retain legal counsel who would pore over each word in his estate plan to seize on any ambiguity that could benefit their clients.”
Robin Williams’ estate ended up with a similar problem when the heirs argued over some of his belongings. The fate of the famous suspenders from the “Mork and Mindy” television show was not disputed, but there was a fight over a tuxedo the comedian wore at his wedding. The issue has been resolved, but not to everyone’s satisfaction.
Disputes can tie up the estates of the not-so-famous, too. Sleeth says he handled the case of a wealthy widower in Virginia who wanted to disinherit his children, who were spread all over the country, and leave his money to a friend. Unfortunately, he waited until shortly before he died to change his will. The children challenged the change, saying he no longer had the required mental capacity to make those decisions.
“That case took years to litigate,” says Sleeth. “He should have made the change as soon as he decided to disinherit them, and not wait until his mental capacity could be challenged.”
For those setting up trusts or other instruments to manage funds, Sleeth says that care needs to be taken in choosing a fiduciary who understands the goals of the wealthy client. “Also be wary of assigning two fiduciaries to an estate, because conflicts could arise between the two,” he says.
If you are on the side of the litigation that is challenging a document or another heir’s claims, he says, file the challenge as quickly as possible. Many states put a time limit on when a will or trust can be challenged; in some cases it is as little as a few months.
“I’ve seen a lot that can go wrong with large estates. To avoid as many problems as possible, engage an estate planner or attorney who is experienced at dealing with these issues, and then listen to him or her, and put it all in writing,” Sleeth says.
