The underlying theme of the majority of my posts are why an estate plan is important for everyone, regardless of age. As I was pondering what topic I would write about next, I decided to go for a “celebrity” angle. So, I googled “celebrity estate planning fails” and found that quite a lot of celebs have made estate planning blunders that cost their estates and loved ones dearly.
Case and point: Steve McNair.
Steve McNair was a professional football player in the NFL. He played for Tennessee and the Ravens during his career and amassed a sizable estate. On July 4, 2009, at the age of 36 years old, he was shot and killed by his mistress.
To add to the tragedy of his murder, McNair had no estate planning documents. Not even a basic will. Therefore, every asset he owned at the time of his death, titled in his own name, had to be probated according to Tennessee’s intestacy laws.
According to reports, McNair’s estate was worth about $19 million. His wife had to hire a probate attorney to handle the probate process. She was named the executor of the estate.
The most notable issues surrounding the estate, according to reports are as follows:
First, his wife failed to list McNair’s two children from a prior relationship, and only listed herself and her two children with McNair has heirs. Illegitimacy does not negate a child’s claim to a share of an estate. The omission of the children meant they could contest the estate and fight to be included. Thus, dragging the probate process out longer than expected.
Second, McNair had purchased a home on a 45 acre tract of land for his mother. She lived in the home for several years with no problems, until McNair’s death. The house was only titled in McNair’s name, not his and his mother’s. Therefore, once McNair passed, the house became a part of the estate. McNair’s wife requested his mother pay rent in the amount of about $3,000.00 per month or move out. When his mother moved out, reports indicate his wife sued her for $50,000.00 worth of property she claimed his mother took from the home.
Third, McNair’s estate had several claims by creditors against it. Including, but not limited to an artist seeking payment for a family portrait, closing of his Nashville Restaurant, and expenses surrounding his farm in Mississippi. Legitimate debts against an estate have to be paid first before any distributions can be made to heirs.
These three are just a few of the issues surrounding the estate. All brought on because McNair died without any estate planning documents. If McNair had at least a basic will, the court would have known what his wishes were for his estate.
Now, a basic will would not have eliminated all of the issues, but it would have eliminated some of them. For example, if McNair intended to provide for his two children from a prior relationship, he could have included them in the will as being entitled to receive a percentage of the estate. Similarly, if he intended for his mother to keep the house she was living in, he could have specified that in his will.
Leaving behind a basic will would still mean the estate would have to be probated. Probate is a public forum, so any issue that did arise would still be public knowledge.
If McNair had created and funded a revocable living trust, however, there would be no probate process. Trusts are private documents that allow a decedent’s estate to pass outside of probate. Meaning, there would be no frozen estate assets in an account waiting for the court to okay the distribution plan. There also would probably not have been any issues at all because the beauty of trusts are they do not lend themselves too much litigation. Sure, someone could challenge a trust, but it is not has easy to do as with a will.
Bottom Line: Planning would have avoided years of heartache, headache, and family disputes.
Now, some of you are probably thinking “well that’s all well and good for a celebrity because they have a lot of money. I don’t have a lot of money, so it doesn’t apply to me.” Wrong.
Think about your estate. Think about the assets you own in just your name. What are they? A car? A House? A bank account?
Do you have a spouse? Do you have children? Do you take care of an elderly parent or support a family member? Do you have specific items you wish to pas to specific individuals? Are there specific people you wish to leave nothing?
I could go on and on with those types of questions. The point behind is, if you were to pass right now without a single document, do you know what is going to happen to your things?
I do. The state you are a resident in is going to choose who gets to administer your estate and dictate who gets what percentage of your estate. Regardless of your wishes and what your family member “knew” you wanted. Unless you expressly spell it out in a document, it is does not matter.
Sure, it might not play out on a grand of a scale as Steve McNair’s did. But, that does not guarantee it will go over smoothly.