It's been widely reported across various websites in the last couple days that Farrah Fawcett's will has been revealed and it "shockingly" disinherited her longtime ex-boyfriend Ryan O'Neal (father to her son, Redmond). These reports are wrong on several levels.
First, the document was her Trust, not her will. You can read it here, courtesy of Radaronline.com. This is an important distinction. Wills are public records and must always be filed in probate to be effective, which allows anyone interested to read them. Trusts, on the other hand, are private documents, normally kept out of court and the public eye.
As I wrote in this article this past July, the contents of Fawcett's Trust were leaked by an anonymous "source" then, and now the whole trust document has been revealed. This is unusual. Normally that is one of the primary reasons why trusts are used, to keep affairs private (and out of probate court).
As the source previously leaked to the media (and as covered in my article on this blog in July), it was revealed then that Ryan O'Neal was not a beneficiary. So the recent exposure of the trust document is nothing new on that front. O'Neal said publicly that he was not surprised and had discussed with Fawcett that their son Redmond would be the biggest beneficiary.
So what did the trust reveal? The real surprising part here isn't that O'Neal was omitted (ex-boyfriends aren't usually included in a trust). Rather, to me, there were far more surprising elements, including that another of Fawcett's ex-boyfriends, Gregory Lawrence Lott, received $100,000. Further, her artwork was left to the University of Texas, her other personal property, including her household furnishings and vehicles, went to her nephew (who also received $500,000 outright), and her father received a trust fund of $500,000, from will benefit him while he is alive. Fawcett's charitable foundation is also a prominent beneficiary.
Who will manage this trust? Fawcett's business manager and producer, Richard Francis. He will be charged with the difficult task of overseeing these bequests -- and more importantly -- the trust fund established for Fawcett's troubled son, Redmond.
It has been widely reported that Redmond has struggled with drug addiction for years. Fawcett obviously knew this when she created this particular trust document on August 9, 2007. So, instead of leaving him money outright, she left $4.5 million to be used for his benefit through a trust fund. When he passes away, what is left from that fund will go onto her charitable foundation.
The specifics of how this will work are a good lesson for others to follow when they have a beneficiary who is not ready to receive a chunk of change all at once. The trustee of the Trust, Francis, will be required to pay the income from the trust fund to Redmond -- or apply it for his benefit -- at least 4 times year, and as often as monthly. If this $4.5 million is conservatively invested to generate even a modest 5% return, this would mean almost $19,000 per month would be available for Redmond, without ever spending any of the $4.5 million itself.
Francis can also tap into the $4.5 million itself for Redmond, but only to the extent it is advisable for his health. This means the money (again, other than the interest earned) cannot be used for things like education, housing, etc. -- only health. Clearly, Fawcett thought this through, because she gave the same trustee rights to use the trust fund money set aside for Fawcett's father for many other needs beyond just health.
This trust provision allows Francis to carefully control the money so Redmond is benefited the best way possible. And, for a drug addict like he is reported to be, this means Francis can spend as much as he deems advisable for rehabilitation (which would clearly improve Redmond's health), without paying anything directly to him for fear of it being spent on drugs, etc.
The only flaw I see in the plan is that Francis is obligated to pay the interest on Redmond's behalf at least 4 times each year. This is still quite a significant sum of money to be spent on him, if his life isn't in a position to benefit by it. Plus, it is odd that things like education and housing wouldn't be included, but that appears to be what Fawcett wanted.
Often, in my law firm, we recommend crafting specific trust provisions for people with drug and/or alcohol addictions that requires them to prove sobriety before receiving money, or tying other specific strings to distributions of money so that this goal can be achieved (such as requiring payments for drug rehabilitation programs).
The beauty of properly-used trusts is that you can be creative and use conditions like this for all sorts of reasons, in addition to sobriety, including promoting hard work, maintaining good relationships, education, and many other goals. We explore how trusts can do this in our book, Trial & Heirs: Famous Fortune Fights!, which helps families learn from celebrity errors how to properly plan for their heirs.
Fawcett gets a lot of credit for using a trust the right way to protect her son and still allow him to benefit from her money. Too many rich and famous people don't do this. For example, as we discuss in Trial & Heirs, celebrities such as Martin Luther King, Jr., Jimi Hendrix, Sonny Bono, and Howard Hughes didn't even have wills, much less trusts.
Trusts are not just for rich people. Anyone with family members they want to leave money to when they die, but are worried what the money may do to them when they get it, should strongly consider creating a revocable living trust with the help of a good estate planning attorney.
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Posted by: Author and probate attorney Andrew W. Mayoras, co-author of Trial & Heirs: Famous Fortune Fights! and co-founder and shareholder of The Center for Probate Litigation and The Center for Elder Law in metro-Detroit, Michigan, which concentrate in probate litigation, estate planning, and elder law. You can email him at awmayoras @ brmmlaw.com.Follow us on Google+