Estate Planning at The Oscars…Best Actor

With the Academy Awards nearly upon us, the Estate Planning group at Eckberg Lammers looks back at some notable estate planning issues that arise in the movies and with the actors and other talent in them.

Note: Our “Best” awards are not necessarily for good planning or good outcomes. Rather, we give the awards for those who provide good opportunities for further discussion.

Today, we consider the awards for Best Actor. There were not many notable estate planning issues arising out of the death of actors in 2019, so for this award, we’ll consider a standout from recent history. Our award for best actor goes to...Philip Seymour Hoffman

Philip Seymour Hoffman died in 2014. The Los Angeles Times reported that the Oscar-winning actor died with a Will that left everything to his long-time girlfriend, Mimi O’Donnell. The Will had been signed in 2004, after the birth of Hoffman’s son, Cooper, but before the birth of his two daughters. The California probate court appointed an attorney to represent the daughters’ interests in the estate. Hoffman’s accountant reportedly said that Hoffman had more than once “summarily rejected” the idea of setting up trust funds for the kids. Hoffman believed that O’Donnell would take care of them and was apparently concerned that the existence of a trust fund might spoil his children.

The wisdom of Hoffman’s approach can be viewed from different perspectives. Based on the reporting above, it appears the Oscar-winning actor was driven by a concern over the personal growth of his children. This concern is not unique to Hoffman; it’s expressed by many of our clients. Many people worry that an inheritance will soften their children away from the discipline required for personal growth.

But did Hoffman consider the different paths people’s lives might take after his death? A few examples:

  • What if his girlfriend Mimi dies early and doesn’t make plans to look out for Hoffman’s children?
  • What if Mimi gets married and decides to leave Hoffman’s fortune to her new man and his kids?
  • What if Hoffman could foresee that one of his daughters would suffer terrible setbacks? Perhaps she develops an illness that requires expensive treatment, or finds herself married to an abusive spouse while she’s trying to raise Hoffman’s grandchildren.
  • What if unique, positive, growth-enhancing opportunities arise – such as the chance to start a new business – only if funds are available to capitalize?

Many of these circumstances could be addressed through a carefully drafted trust.

And what if Hoffman could be assured that his children wouldn’t have knowledge of their inheritance until after they reach the age of 35 or later? The usual rule is that trustees are obligated to notify beneficiaries of their rights under a trust once the trust becomes irrevocable. See, e.g., Minn. Stat. § 501C.0813(a). In Minnesota, however, a settlor can include an express provision that will preclude beneficiaries from learning of their rights under the trust. See Minn. Stat. § 501C.0813(b). Instead, the settlor designates a responsible person to stay informed about the trust, look out for the beneficiaries’ interests and enforce their rights if the need arises. This facilitates the creation of a “silent trust,” which can quietly provide a safety net without the beneficiary even being aware of its existence.

We cannot know whether Hoffman considered this option or what he would have made of it. Significantly, the provisions of Minn. Stat. § 501C.0813(b) did not become effective until 2016. Had he returned to see his estate planner after 2004 – say, when each of his daughters were born – he might have reconsidered his approach. Lives change and laws change; our estate plans should change with them. That’s why it’s helpful for clients to revisit their plans every five years.

Whatever factors led to its formation, Hoffman’s basic estate plan, at least as reported by the Los Angeles Times, stands as a stark choice when considered against the flexible possibilities available under Minnesota law. Hoffman’s Will takes the prize but, as the saying goes, it’s not a movie we would all want to be in.

Contact us today if you have questions about this topic or if we can assist you with your Estate Planning needs. 

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