Excerpts for 101 Biggest Estate Planning Mistakes


The 101 Biggest Estate Planning Mistakes


By Herbert E. Nass

John Wiley & Sons

Copyright © 2010 John Wiley & Sons, Ltd
All right reserved.

ISBN: 978-0-470-37503-7


Chapter One

The Single Biggest Mistake Is Not Planning for the One Certainty in Life ... Death

There are many reasons that an estate plan is not properly effectuated.

The examples used in this first chapter are stories of lost souls, lost Wills, or Wills that were not properly executed or were far out of date. Sometimes, people could just care less about attending to their estate planning and what happens after they are gone. Many people may also rest on false premises, believing that the estate plan that was executed 10 or 20 years ago is still current and effective, as seen in the very out-of-date Wills of Robert F. Kennedy and Ted Ammon. Some might have the best intentions, but just don't get it done because they cannot sign a Will due to a physical disability. With proper legal advice, a Will can be duly executed, as shown by the blind Ray Charles and paralyzed Christopher Reeve. And sometimes a person may think that he has a Will, but a Judge in a court or several courts of law may disrespectfully disagree, as some of the hopeful named beneficiaries of Howard Hughes found out the hard way in the estate mess that he left behind.

Whatever the reason that an estate plan is not ultimately found to be valid or effective, the ramifications and problems that result can be quite serious, so be sure to avoid all of the mistakes outlined in this first chapter, which describes all the ways to make the single biggest mistake.

Mistake #1: No Estate Planning Whatsoever

Question: What do all of the following people have in common?

President Abraham Lincoln Martin Luther King, Jr. Rita Hayworth Jayne Mansfield Pablo Picasso Jean-Michel Basquiat Sonny Bono Lenny Bruce Chris Farley Florence Joyner Sal Mineo Dylan Thomas Peter Tosh Bob Marley Tupac Shakur Keith Moon George Gershwin John Coltrane John Denver Peter Lorre Howard Hughes

Answer: They all died without a valid Last Will and Testament.

How do I know this? Because I have copies of the court files about their estates, indicating that each of them died intestate-that is, without a valid Last Will and Testament. Those files are all a matter of public record and can make for fascinating reading.

In addition to all the famous people mentioned above, most Americans die without a valid Will, which often leads to unnecessary expenses, complications, and dreaded taxes. If you don't have a Will, the laws of the state where you are domiciled at the time of your death determine who will get your property, when they will get your property, and who will be the person or public administrator to administer your estate and take care of any minor children.

Although my friend, the film director Spike Lee, once told me quite bluntly that he did not like the concept behind my first book, Wills of the Rich & Famous, and did not believe that his Will, nor anybody else's, should be a matter of public record, I respectfully disagree with Mr. Lee. For the ownership of property to be transferred in a manner that leaves a clear record of how the title to such property came to be in the name of the present owner, there also needs to be a way for a claimant or creditor of a decedent to be able to assert claims against the decedent's estate, so the name and address of the executor of the Will needs to be readily accessible.

Following are copies of the court papers related to the intestate estates of singer, entertainer, and U.S. Congressman Sonny Bono (Exhibit 1.1) and rapper Tupac Shakur (Exhibit 1.2), whose estates were administered in Los Angeles, California. The partial inventory of the tangible personal property in the estate of 25-year-old Tupac Shakur makes for some especially bling-bling reading.

And let us not forget reggae, whose most famous son was Bob Marley. His estate was subject to the jurisdiction of the Supreme Court of Judicature of Jamaica, and the court papers for his estate reveal that his largest asset, other than his musical talent, may have been a company called Tuff Gong Records Limited. (See Exhibit 1.3.)

The great American civil rights leader Dr. Martin Luther King was assassinated in 1968. He died without a Will, left a widow, Coretta Scott King, and four young children. His estate was subject to the jurisdiction of the Fulton County Court of Ordinary in Georgia, and the court papers reveal that his widow needed to post a $20,000 bond for her husband's estate. That cost would have been avoided if Dr. King had seen a lawyer to prepare a Last Will and Testament, which usually expressly states that the executor need not post any bond.

Each of these people had his or her own reasons for not signing and leaving behind a Will. However, sometimes the Will existed but cannot be found. Sometimes, disgruntled relatives or friends are able to make a Will that does not benefit them "disappear." Sometimes Wills are lost when a lawyer moves offices and files are misplaced as a result.

There are alternatives to making a Last Will and Testament. You can establish a trust during your lifetime that owns all of your property; that property is instantly transferred upon your death to the remaindermen of such a trust. Such a trust can avoid the court procedure by which a Will is proved to be valid or invalid to the satisfaction of the probate or surrogate's court judge. The word probate comes from the word probatio, which in the canon law consisted of the proof of a Will by an executor.

In the end, those who fail to plan, plan to fail. Those words are so true when it comes to estate planning. Therefore, the first, and most critical estate planning mistake, is simply failing to plan.

Mistake #2: Out-of-Date Wills

Despite having been the Attorney General of the United States of America, Robert F. ("Bobby") Kennedy left a Last Will and Testament that was obviously out of date. Signed in 1953, Bobby's Last Will and Testament named his brother, John F. Kennedy, as a co-executor, co-trustee and successor guardian of his and his wife, Ethel's, numerous minor children. The other named co-executor was Bobby's youngest brother, Edward "Teddy" Kennedy. Unfortunately, despite the assassination of his brother and co-executor, President John F. Kennedy in 1963, Bobby Kennedy never updated his Will to reflect that fact. This might have proved quite problematic when Bobby was assassinated just five years later in 1968.

Fortunately, though, Bobby's Will was properly drafted and provided for the contingency that if any of the named executors did not act, then the following persons, in the order named, were designated to fill any vacancy: Eunice Kennedy Shriver, Patricia Kennedy Lawford, and Jean Kennedy Smith.

The probate papers filed with the New York County Surrogate's Court indicated that sister Eunice renounced her right to act as a successor executor. Consequently, it was sister Patricia Lawford who filled the void left by John's death. That decision does not seem to have been the result of any disharmony in the family, as Eunice was living in Paris, France at the time and Patricia lived on Fifth Avenue in New York City.

Given that Bobby was a lawyer, it seems odd that he didn't change his Will after John was killed in 1963. This failure to update might seem even more surprising because Bobby was not just any attorney, but none other than the Attorney General of the United States of America. In my own law practice, I have noticed over the years that lawyers (other than those specializing in trusts and estates matters) are often quite delinquent in keeping their own estate planning documents current. Perhaps Bobby, like most busy attorneys, put his personal affairs last.

At the time of his assassination in 1968, Bobby had 10 children, and his wife, Ethel, was pregnant with another daughter. Rory Elizabeth Katharine Kennedy was born five months after her father's death. It is yet another sad footnote to the tragic history of the Kennedy family that on the day of Rory's wedding, her cousin, John F. Kennedy, Jr., his wife, and his sister-in-law died when their plane crashed into the sea.

The horrific death and divorce of Wall Street mogul R. Theodore ("Ted") Ammon is also an example of the ramifications of failing to keep one's Will current, particularly given the changing marital circumstances in people's often tumultuous lives. Despite going through an unusually ugly and bitter divorce, the multimillionaire wonder boy never updated the Will that he had signed on August 22, 1995, before the end of his marriage and his life.

Ted Ammon's Will had been prepared by one of New York City's fanciest and finest (i.e., most expensive) law firms, Skadden, Arps, Slate, Meager & Flom, and was a whopping 45 pages long. The Will provided that Ammon's wife, Generosa, was to be a co-executor with the venerable bank, J.P. Morgan Chase & Company. Generosa was also the named beneficiary of all of Ammon's tangible personal property, real estate, interests in Kohlberg Kravis Roberts & Co., and almost the entire residuary estate, either outright or in trust. Generosa would have been entitled to none of that after the divorce was completed, but it never was. At the time of Ted Ammon's murder in his mansion in East Hampton, New York on October 22, 2001, he was still legally married to Generosa, and his Will, which gave her almost everything, was valid and admitted to probate, but badly and sadly out of date.

One has to wonder what Mr. Ammon and his high-priced lawyers were thinking when they never updated his Will despite his impending and bitter divorce. We can only speculate as to whether the fact that the Will was not ever changed was one of the motivating factors leading to Ted Ammon's murder by an electrician named Danny Pelosi. Mr. Pelosi married Generosa Ammon about three months after her husband's death. Mr. Pelosi was convicted of the murder of Ted Ammon and is serving a life sentence in jail, and Generosa Ammon Pelosi died from breast cancer in 2005. Mrs. Pelosi did not make the same mistake as her former husband Ted; in her last Last Will and Testament, she made no provisions for her surviving husband, jailbird Danny Pelosi.

Mistake #3: Losing Your Will

Let's face it. We all lose something sometimes. However, when the thing that is lost is a Last Will and Testament, then that loss can have serious implications that could cost your estate additional taxes and throw the proverbial monkey wrench into your estate plan. People don't plan to lose things, but despite that, it still happens all the time.

This begs the question, "Where is the best place for me to keep my Will?" Most experienced trusts and estates attorneys would agree that it is best if the client does not keep his or her original Will, and if the client does keep it, that he or she does not put it in a safe deposit box at a bank to which he or she is the only person with access to that box. For practical reasons, if the client keeps his or her Will and is the only one who knows that the Will is in the shoebox in the guestroom closet, then that Will may never be located. If the client feels that the shoebox is not secure enough and puts the Will in a safe deposit box in the vault at a bank, that box may be sealed and be inaccessible once the client has died. Even if you have given someone else a power of attorney with authority to access your safe deposit box, that power of attorney terminates when the principal dies, and the agent may be left out in the cold. It may require a court order to allow someone to access that safe deposit to search for your Will, and obtaining that court order may be time consuming and expensive.

The best place to leave your Last Will and Testament is with the attorney who prepared it. Just be sure that he or she sends you a conformed copy or photocopy of your Will shortly after you have signed it. Under New York law, and in many other states as well, if the original Will was in possession of the client and the Will cannot be located after the client dies, it is presumed that the client revoked that Will, and the estate may pass by intestacy or by the terms of a prior Will. If the attorney keeps the original Will in his or her possession, then no such presumption arises, and a copy of the Will may then be admitted to probate if the original cannot be located.

Although I have never lost the original Will of a client of mine, I have seen many cases where that has happened, especially around the time that an attorney might be retiring or closing down his practice. That is often when client files, including original documents such as a Last Will and Testament, get lost in a big dumpster. It is irresponsible and unprofessional behavior for the attorney not to protect and preserve his client's important documents, but it happens nonetheless. The appropriate action would be to file the client's original Will with the surrogate's court for safekeeping or to obtain the client's permission and instructions to send the original Will to another attorney who will be representing that client in the future. Returning an original Will to the client is not generally a good idea for all of the reasons listed above. To avoid this happening to you, it is a good idea to stay in touch with your attorney and be sure that he or she always has current contact information for you.

Regardless, it is a mistake for the client to insist on holding his or her original Will, because at the time that the Will is needed, the client is no longer anywhere to be found.

Mistake # 4: Do-It-Yourselfers and Handwritten Wills

Many people adhere to the belief that if you want a job done right, you need to do it yourself. That applies to people who are not lawyers, but believe that they can do a better job than a lawyer even if they don't have a legal degree. Some people believe that lawyers just "get in the way" of communication, and they prefer to take written matters into their own hands. Sometimes that can be fine, but oftentimes, trying to write your Will without legal advice is a prescription for disaster.

From California, the land of fruits, flakes, and nuts, we get the following two handwritten (i.e., holographic) Wills of comedian Phil Silvers (Exhibit 1.4) and film director John Cassavetes (Exhibit 1.5), who died in Los Angeles, California in 1985 and 1989, respectively.

Whereas these two holographic Wills with no witnesses, which are reproduced in Exhibit 1.4 and 1.5, could be and were in fact probated in the State of California, the same would not be true in the State of New York and many others. In California, the signature and material portions of a Will must be handwritten by the testator to be deemed acceptable; however, New York courts will not accept holographic Wills, except for those of military personnel or persons serving with or accompanying them. Although Phil Silvers may have been Sergeant Bilko on the tube, he was not serving in the military at the time that he scrawled out his Will in his own scratchy handwriting. For ease of reading, Silvers' Will appears in its original handwritten form in Exhibit1.4a and is transcribed in Exhibit 1.4b.

Although Silvers actually wrote his Will while he was in New York, it was probated in California. As much as people may have liked Phil Silvers' shtick, he was not a preparer of legal documents. Silvers ends his Will with the single Hebrew word "Shalom," which means hello, goodbye, and peace. As Silvers says in his Will, he was "one of a kind," and so was his Will.

The blunt, no-nonsense style of film director John Cassavetes comes through loud and clear in his one-page Will, which is reproduced in its entirety in Exhibit 1.5. Cassavetes' wife of 30 years, actress Gena Rowlands, was appointed the executor of her husband's handwritten Will by the Superior Court of California, Los Angeles County. Cassavetes's handwritten Will was witnessed by his attorney and his secretary, but it is pure Cassavetes that states, "I owe no one any debt or obligation ..."

(Continues...)



Excerpted from The 101 Biggest Estate Planning Mistakes by Herbert E. Nass Copyright © 2010 by John Wiley & Sons, Ltd. Excerpted by permission.
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