Williams’ estate planning earns praise

By now, the American public has become accustomed to stories of Hollywood actors’ deaths and their various financial missteps.

There was James Gandolfini, who left his wife with only 20 percent of his estate, meaning the other 80 percent didn’t qualify for the unlimited tax-free transfer of money to a spouse. The cost of that was nearly $30 million to taxes.

There was Philip Seymour Hoffman, who left his three children nothing in his will. And because he wasn’t married to his long-time partner and the mother of his three kids, more than $30 million of his estimated $35 million wealth was fully taxable.

So for financial experts, it’s refreshing to see the example of planning Robin Williams left behind when he died August 11.

Doing it right

In his career, Williams won an Oscar, two Emmys and five Golden Globe awards, and the movies in which he was a leading actor grossed more than $6 billion worldwide. Two years ago he was worth an estimated $130 million, according to Forbes. Between two previous divorces and the single-season run of his recent television comedy The Crazy Ones, Williams’ wealth was near $50 million at his death, Forbes says, adding that the estimate may be high. According to published reports, says DailyFinance , Williams created at least two trusts, one for his real estate and one for his children. The first obvious benefit of setting up a trust is that it is not subject to the probate process, meaning Williams’ affairs will not be part of the court record. Meaning that, unlike Gandolfini and Hoffman, it will remain private.
In his real estate trust – called Domus Dulcis Domus Holding Trust, which is Latin for “Home Sweet Home” – Williams reportedly placed his Napa Valley mansion that rests on 643 acres; it has been listed for sale since April for $29.9 million, according to InvestmentNews. He also owned a 6,500-square-foot house in Tiburon, California, worth an estimated $6 million. Although both are subject to mortgages, the equity left behind is around $25 million. The other trust, which TMZ obtained and leaked, was created in 2009 when Williams was in the midst of divorce to his second wife, Forbes says. The trust names his three children as beneficiaries, with benefits to be paid out when they reach ages 21, 25 and 30. This trust passes the money to his children whether he was dead or alive, so it likely was executed as part of his divorce, Forbes says, adding that it is not known how much money was in the trust.

The benefits

Forbes says that regardless of Williams’ motivations for setting up his real estate trust, it shows he used sophisticated estate planning to protect his family. It appears that the holding trust was executed, in part, to minimize estate taxes. Irrevocable real estate holding trusts, when established and used correctly, often can place valuable real estate holdings outside a person’s taxable estate, Forbes says. And with an estimated $25 million in real estate holdings, it could mean generous savings for Williams’ family.

Forbes says that the children’s trust funds, the real estate and any life insurance will not technically be part of Williams’ estate. However, ongoing royalties from his movie and television work, earnings from new deals that use his image and likeness, and future releases of new material would be managed through his estate unless he had assigned those rights to another trust or corporate entity. These, Forbes says, should be worth a significant amount.

And that’s one more way Williams did things right when setting up his affairs before his death.

From: Steven M. Greenwood, guest contributor. This article first appeared as an estate planning newsletter and is reproduced with the author’s byline. It reflects his practice rather than insurance advice from this agency.

A note from the agency: probate is an attorney’s subject, and the insurance side of it is ours. A life insurance death benefit is generally paid to whoever is named on the beneficiary designation, which sits outside the will and outside probate. That designation is what controls, so an out-of-date one can direct money somewhere the will does not. Naming the estate itself as beneficiary pulls the proceeds back into probate, which is usually the opposite of what people intend. We cover the choice in who to name as your beneficiary, and the rules that keep a policy in force in lapse and reinstatement in California.

Disclaimer

This article is provided by Schneiderman Insurance Agency for general informational purposes only. It is not legal, tax, financial, claims, or coverage advice. We are licensed insurance professionals, not attorneys, accountants, or financial advisors, and nothing here should be relied on as a substitute for advice from a qualified professional in those fields. This content is general in nature and is not a review of, or a recommendation for, any individual reader’s specific insurance needs, policies, or circumstances. Insurance coverage depends entirely on the specific terms, conditions, endorsements, exclusions, limits, underwriting eligibility, carrier, and facts of each situation, and the actual policy language always controls. We do not guarantee any coverage, pricing, eligibility, underwriting approval, or claim outcome. Reading this article does not create an agent-client relationship. To understand how these issues apply to your situation, please review your own policy and speak with a licensed insurance professional, and consult legal, tax, or financial advisors where appropriate.