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Hugh Hefner Was A Role Model ... When It Came to Estate Planning

When most people think of Hugh Hefner, they picture the famous Playboy bunny logo, young and buxom blonde women by his side, and his ever-present robe and captain's hat.  But people should also think of his smart business and planning sense.  After all, Hefner started a unique business with $8,000 in 1953 and grew it into a massive global enterprise.   Hugh-hefner-playboy

How Hefner used the resulting wealth to plan for his golden years and beyond was as unique and innovative as the way he lived his life.  It certainly isn't a road-map for everyone, but it worked out well for him.

It started at least as far back as 2010, when Hefner and his second wife, Kimberley Conrad, finalized their divorce after a 12- year separation.  At this time, records from his divorce pegged his net worth at about $43 million plus the value of his Playboy Enterprises stock and real estate.  Those records also revealed his yearly income to be nearly $3.5 million, with his expenses topping out at just over $1.3 million annually.

The big open question, of course, was:  What was the Playboy stock worth?  In 2011, Hugh Hefner partnered with a private equity group to purchase the Playboy stock and take the company private, for a total package worth $207 million.  When the dust cleared, Hefner ended up with a 37% ownership interest in the new company along with an employment contract that paid him one million dollars per year, gave him editorial control over the Playboy brand, and the right to remain in the famed Playboy mansion practically rent free for the rest of his life.

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Hawaiian Princess Kawananakoa In Court Battle Over $200 Million Trust Fund

Princess Abigail Kawananakoa, known to her friends as Kekau, is true Hawaiian royalty. Now, a bitter court battle rages over the questions of whether she is mentally capable of managing her vast fortune and whether she is the victim of physical abuse and financial exploitation.   Kawananakoa

Princess Kawananakoa, age 92, is a direct descendant to the throne of the Kingdom of Hawaii.  When the United States annexed Hawaii in 1898, it ended the reign of Queen Lili’uokalani, Kawananakoa's great-grand aunt. As the closest living relative, Kawananakoa is considered to be the heir apparent who would have assumed the throne if the monarchy had been restored.

Kawananakoa was also the beneficiary of a large fortune, thanks to her great-grandfather, James Campbell. Campbell, a 19th-century sugar cane industrialist who made his fortune in Hawaii, died in 1900 with an estate worth $3 million at the time. The Campbell Estate has grown since then, topping out over $2 billion in 2007 when the Estate was converted into corporate holdings. Kawananakoa inherited $250 million, mostly in the form of stock in the James Campbell Corporation. Today, her trust is estimated to be worth $200 million.

This trust fund is at the heart of the dispute, which pits her once-trusted attorney against her long-time domestic partner.  The attorney, James Wright, petitioned the probate court to remove Kawananakoa from controlling her trust. His petition was initially granted by the probate court judge, but now is challenged in court. Wright alleged that Kawananakoa suffered an acute stroke leaving her unable to manage her health, self-care, or financial matters. Wright based his filing on the determination of two physicians.

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Trouble Brewing Between George Michael Estate And His Former Lover

When British pop star George Michael, 53, whose full name was Georgios Kyriacos Panayiotou, died on Christmas Day, 2016, he was discovered by his lover, Fadi Fawaz.  Tensions have been building between Fawaz and Michael's surviving family members, which include his two sisters and his father, ever since that day.  George Michael

According to reports from England, Michael's family members want nothing to do with Fawaz, to the point that he is not even welcome at the funeral. After months of delays before Michael's body was released, during which time it was determined he died of natural causes related to a heart condition, Michael's sisters are planning a small, private ceremony at a 30-seat chapel.

Fawaz has complained that the family left him out of funeral plans and felt that he was being blamed for George Michael's death, until the final determination of how he died was made public. George Michael's cousin said it was Fawaz who snubbed the family, not the other way around.  Reportedly, Fawaz was paid more than  £10,000 a month to be with Michael.

The real battle will be over George Michael's London townhouse, estimated to be worth  £5 million.  Fawaz has been residing in the house ever since Michael died, even though Fawaz reportedly is not named as a beneficiary in Michael's will.  The family is said to be contemplating legal action to remove Fawaz from the home, which Fawaz claims he should be allowed to use.

Specifically, Fawaz believes that he had an agreement with George Michael to use the property for the foreseeable future.  This apparently was based on a conversation, not a written agreement.

If that is the case, then Fawaz would not have a legal leg to stand on.  In England, as in the U.S., agreements involving real estate must be in writing to be valid.  So if George Michael did agree that Fawaz could stay in the home -- either as part of a business arrangement or due to the personal relationship -- that would not be binding on the Estate without a written statement that spelled out the terms.

But this doesn't mean that Fawaz will go away quietly.  Because he has been living in the home, and has a claim that he is entitled to stay, the family would have to initiate legal proceedings to evict him.  Once in court, Fawaz would certainly argue that the verbal agreement gives him the right to occupy it.  And there is no telling what else Fadi Fawaz may say to complicate the matter.  That legal proceeding could turn ugly and embarrassing for Michael's family.

While the specifics of George Michael's estate plan have not yet been made public, he reportedly divided his estate -- estimated to be worth in the neighborhood of £105 million (or roughly $130 million) -- primarily between his two sisters, through a will.  If that is the case, then George Michael's last will must be publicly filed and processed through probate court, which will allow it to be easily obtainable by members of the British media or anyone else. (When wills are probated, they become public documents for anyone to read.)

So far George Michael's will has not been filed for probate because the family has focused on the funeral, which was delayed by the investigation into his cause of death.  Once it's filed, we'll know for certain who is to receive what and what assets Michael had.  We'll also find out if Michael wanted Fawaz to receive anything, including the right to stay in the London home.

George Michael's estate highlights why it is much better to rely on a living trust rather than a will.  Living trusts, when properly drafted and funded during one's lifetime, can help families avoid probate court.  They can also spell out specifically who receives what, when and how, without the necessity of  probate court, where disputes are more common.

For example, if Michael did want Fawaz to be able to occupy the London home for a time after he died, that could have been spelled out in a private trust document, free from media scrutiny.

It's not only celebrities who benefit from detailed and thorough estate planning, including living trusts.  Anyone who wants to protect their heirs from the increased expense, hassle, and public nature of probate court should talk to an estate planning attorney about whether a living trust makes sense for them.

Danielle and Andy Mayoras are co-authors of Trial & Heirs: Famous Fortune Fights! and attorneys with the Michigan law firm, Barron, Rosenberg, Mayoras & Mayoras, P.C. Click here to subscribe to their e-newsletter, The Trial & Heirs Update and learn more about their book. You can reach them at Contact@TrialAndHeirs.com  


Embryo Feud Between Sofia Vergara And Nick Loeb Grows Nastier

The moment the lawsuit started, it was ugly.  Sofia Vergara and Nick Loeb have moved well past ugly into uncharted territory in their courtroom battle that addresses views about life itself.   Vergara and Loeb

As we wrote after the case began, Vergara and Loeb's disagreement teaches an important lessons for anyone considering IVF or other mean of assisted reproductive technology.  But there's a greater lesson now.  When the courtroom is the backdrop for a relationship of love turned to hate, things can rapidly spiral out of control.

Johnny Depp and Amber Heard provided a good example recently.  But even they -- despite dramatic accusations of spousal abuse, infidelity, blackmail, and more -- found a way to put their differences aside, reach a settlement, and end the fighting.  Vergara and Loeb don't appear to be heading down the same path.

Neither is willing to blink about what should happen to the two frozen embryos that they had created while together as a couple.  At the time, Vergara and Loeb tried to use In Vitro Fertilization to conceive a child.  They split after one failed attempt, before trying for a second time.  Two female embryos were left frozen.

At the start of the IVF process, Sofia Vergara and Nick Loeb both signed a form directive from the medical facility.  This form included an agreement with different options for what would happen to the embryos if not implanted.  They filled out the form and both signed it, indicating that if either of them died, the embryos would be thawed, which would destroy them.  The embryos would only be implanted or otherwise used if both Vergara and Loeb agreed to it.  If not, the embryos would remain frozen indefinitely.

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Prince Estate Enters New Fight Over Who Will Inherit His Millions

So much trouble caused by such a simple concept.  When you create a will, you decide who receives your assets after you die.  If you don’t, the laws of the state you live in determine it.  What happens when those laws aren’t too clear?  Chaos.  And the Prince estate is experiencing it in full force.   Prince peforming

Maybe it’s fitting for the estate of the man who sang, “Let’s Go Crazy.”

Prince’s estate — reported to be worth as much as $300 million dollars before taxes — is tied up in the early stages of a long battle over who really are his heirs.  Still?  Didn’t the judge already resolve that months ago?

Originally, it appeared so.  Dozens of people came forward claiming to be Prince’s son, daughter, or other relative.  The DNA did not support them, and the judge denied their claims.  He determined that Prince’s full sister and five half-siblings all qualified as heirs.  He ordered the other two, a reported niece and grand-niece, to undergo DNA testing as well.

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Gene Wilder And His Struggle With Alzheimer's Highlight Estate Planning Lesson

The death of Gene Wilder saddened Willa Wonka fans across the globe — not to mention fans of  Blazin’ Saddles, Young Frankenstein, and many others.  When his family issued a statement saying that Alzheimer’s disease claimed his life, it served as a valuable lesson.  Alzheimer’s disease is a killer.  As Wilder’s family aptly described it, it’s an “illness-pirate.”   Gene Wilder

Gene Wilder is far from the first famous actor to fall victim to Alzheimer’s.  Jimmy Stewart, Peter Falk, Charlton Heston, and Rita Hayworth are just a few others.  And of course the disease has attacked celebrities from many different industries, including Hollywood producers like Aaron Spelling, politicians like Ronald Reagan, singers like Etta James and Glen Campbell, and sports celebrities like basketball coach Pat Summitt and ball manager Sparky Anderson.

Sadly, there is no cure for Alzheimer’s disease.  It always leads to death.  While the official cause-of-death for most celebrities who suffered from the disease is usually listed as another affliction, such as a pneumonia or sepsis, Alzheimer’s disease is the real culprit for millions of Americans, causing the brain to decline until the body succumbs.  Gene Wilder’s bout with it is notable because his family attributed his death entirely to Alzheimer’s disease, whereas in most celebrity deaths it is listed only as a contributing factor, if at all.

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Tom Clancy Estate Battle Ends, But Valuable Lesson Remains

While the final Tom Clancy estate battle may not have been as exciting as the climactic scenes in The Hunt for Red October or Patriot Games, the struggle between author Tom Clancy’s widow and four adult children over his $86 million estate is now over.  The seven justices on the Maryland Court of Appeals (the highest court in Maryland) were asked to rule about what a key clause in the codicil to Clancy’s will actually meant.  While it was close — four votes to three — the ruling marked a decisive victory for Clancy’s widow.   Tom-clancy

Considering that Tom Clancy is one of the best-selling authors of all time, it is ironic that the fight boiled down to how to interpret a clause in his estate planning documents that was written in an unclear manner.

The dispute centered around a provision in Clancy’s second codicil (which means amendment) to his will.  The will, originally signed in 2007, divided Clancy’s assets into three trusts:  one-third for his wife, another third for his wife to use while she was alive and then onto his daughter from that marriage, and the last one-third to be split between his four adult children from a prior marriage.  You can read more details about his estate and how the dispute started in our prior article, Tom Clancy Estate In Family Fight Due To Poor Estate Planning. 

Just weeks before he died at 66 from heart failure, Clancy signed the codicil, which included this key sentence:  “No asset or proceeds of any assets shall be included in the Marital Share of the Non-Exempt Family Residuary Trust as to which a marital deduction would not be allowed if included.”

Does this language seem a bit unclear to you?  If so, you’re not alone.  The seven justices of Maryland’s highest court were closely divided about what this language meant.  The four who ruled in favor of Clancy’s widow believed that this clause meant that all estate taxes from Tom Clancy’s Estate would have to be paid by the children’s trust, not the trusts containing her money, because that was the only way to fully protect the martial deduction to federal estate tax laws.

The other three justices sided with the children.  They agreed that this clause was meant to protect the marital estate tax deduction yet felt it was not meant to alter another provision in Clancy’s will that stated that the tax bill was to be paid equally from two of the trusts, not from the children’s trust alone.  In other words, they felt that the children should only pay one-half the tax bill, not all of it, and this clause did not alter the outcome.  These justices felt that Tom Clancy wanted to protect the marital deduction but not to increase it at the expense of what his children would inherit.

Interestingly, the lawyer who drafted this codicil initially acted as executor of Tom Clancy’s estate, and he sided with the children.  This certainly suggests that the language was intended to apply as the children contended, but the law turns not on what was intended, but on what the documents actually say.

What does all this mean for Tom Clancy’s heirs?  The four children now have to pay an estate tax bill to the IRS of almost $12 million.  If they had won, the total tax bill would have been closer to $16 million, but they would have split it with one of the trusts set up for Clancy’s widow.  So they lost $8 million, and the IRS lost out on about $4 million.

That’s a lot of money in play over one awkward sentence.  Ahh rich people, problems, right?  Not so fast.

Clancy built his fortune on weaving words into compelling stories.  But with one unclear clause in his estate planning documents — a clause that the drafting lawyer felt said something different than what the Court of Appeals ruled — Clancy’s heirs were forced to battle in court for two years, with millions of dollars on the line.  And it all would have been avoided if the language was clear.

Here’s the lesson for all of us (millionaires and non-millionaires alike):  What you intend your will or trust documents to say does not matter if they are written differently than what you meant.  The wording of the documents, not what you tell your estate planning attorney, is the only thing that matters.

Battles like this do happen on a regular basis across our country.  While millions of dollars of estate taxes aren’t usually on the line, it’s very common for poorly-drafted wills and trusts to lead to long, expensive battles among heirs who read the same language in different ways.

So how do you insure that your wishes are followed and prevent a fight like this happening to your heirs?  First, work with an experienced estate planning attorney.  Attorneys who specialize in estate planning are far less likely to prepare a confusing or contradictory document that those who don’t.  This doesn’t mean that mistakes cannot happen, even by the best attorneys, but the chances are greatly reduced.  Not all lawyers are the same, just like not all doctors are.  It’s far better to work with an estate planning specialist who comes with a strong recommendation.

Second, read your documents carefully before you sign them.  Ask questions of your attorney; make sure you understand what everything means.  If you have any doubts, you can always have a trusted professional or another attorney give you a second opinion.  Taking the time to be careful and thorough is always a good idea, when it comes to estate planning.

If a fortune fight can happen to the estate of a man who made tens of millions of dollars through his words, it can happen to you too!  Take your estate planning seriously and hire the best attorney you can … and even then read the documents carefully to make sure they say what you really intend.

Danielle and Andy Mayoras are co-authors of Trial & Heirs: Famous Fortune Fights! and attorneys with the Michigan law firm, Barron, Rosenberg, Mayoras & Mayoras, P.C. Click here to subscribe to their e-newsletter, The Trial & Heirs Update and learn more about their book. You can reach them at Contact@TrialAndHeirs.com