Whitney Houston's fortune bounced from sky-high to significant debt. What did this mean for her estate? And was it money — or something else — behind Whitney’s ugly legal battle with her “step-mother”?
How exactly does Bobby Brown fit into all of this?
This is installment #4 of our Estate Planning Lessons From The Stars series, which is based on the Celebrity Legacies TV show for which we provide commentary as the estate legal experts. See other articles in the series here.
Before Whitney Houston unexpectedly drowned in a Beverly Hills hotel bathtub at age 48, on February 11, 2012, rumors circulated that she was in such financial trouble that she was nearly broke. She reportedly died $20 million in debt.
How could that be possible for the singer who signed a $100 million record contract in 2001? And 2001 doesn’t even rank as her most successful year! In 1993, Whitney earned $33 million from The Bodyguard soundtrack and gave birth to her only child, Bobbi Kristina.
By the time of her divorce from Bobby Brown in 2007, the divorce paperwork revealed she had only ten million dollars worth of assets and more than four million dollars in debt. Whitney Houston didn’t sell enough records after 2001 to repay the advance on her $100 million recording contract, meaning that she owed back a substantial amount of money from that deal.
That’s also around the time that Whitney Houston began a bizarre legal fight against her step-mother, Barbara Houston. Barbara, the widow of Whitney’s father, sued Whitney in 2008 claiming that Whitney had wrongly kept one million dollars in life insurance that Barbara felt was intended to benefit her, even though Whitney was the named beneficiary.
Barbara contended in the lawsuit that the life insurance money was meant to repay Whitney for a mortgage she held over her father’s house, and Whitney was supposed to release the mortgage (around $700,000) and turn the rest of the money over to Barbara. Barbara pointed to letters from accountants and attorneys who were involved in the mortgage transaction that confirmed this was her late husband’s intent.
So did Whitney give in and release the mortgage and some of the money? No — just the opposite. She counter-sued, asking to foreclose the mortgage, take Barbara’s house, and keep all of the insurance money plus interest. Whitney also used the public lawsuit to point out how Barbara was 40 years younger than Whitney’s father, met him as a maid cleaning his house, and how the couple got married before the ink on the divorce judgment between Whitney’s parents was even dry.
Whitney Houston ultimately won that lawsuit — after it went up to the federal court of appeals — but before Whitney’s lawyers could finish the eviction, Whitney died. If her father had made his intent clear in his estate planning documents, this ugly and expensive battle could have been avoided. He should have named either his estate or a trust as the beneficiary of the life insurance policy, and then spelled out in his will or trust who was to keep the money and why.
Given that lesson of how poor estate planning can cause complications, surely Whitney would have taken care of her own estate planning the proper way, right? Not exactly. Her will was signed in 1993 — one month before her daughter was born — and she never updated it, throughout her marriage, divorce, or the birth of Bobbi Kristina.
And strangely, Whitney Houston didn’t ever set up a trust — which is standard protocol for most people with even a fraction of Whitney’s wealth. Instead, her will stated that all of her assets would go to any children she had (which of course, turned out to be just Bobbi Kristina), payable in percentages as she reached certain ages: 10% at age 21, one-sixth at age 25, and the rest at age 30.
Luckily for Bobbi Kristina, the spike in sales after Whitney’s death led to enough money to pay off Whitney’s $20 million in debts, and created another $20 million in net worth for the estate.
But this financial turn-around wasn’t all roses and sunshine. Whitney’s family was concerned that Bobbi Kristina wasn’t mature enough to handle millions at age 21. They felt Whitney really intended for her to get the money later in life. Whitney’s mother, Cissy, as well as others in the family, worried that Bobbi Kristina would fall prey to unsavory people trying to get to Whitney’s money.
In fact, because of the family’s concerns, it led to trouble at Whitney’s funeral, surrounding Bobby Brown. And later on, it caused the family to question the motives of Nick Gordon — who married Bobbi Kristina just as she turned 21 (despite the fact that many considered him to be like a brother to Bobbi Kristina).
Because of their concerns, Cissy Houston, along with Whitney’s sister-in-law, Pat Houston, started legal proceedings to reform Whitney’s will so that Bobbi Kristina wouldn’t inherit so much money at such a young age. But their efforts did not make it very far. Cissy and Pat had to drop the case because, regardless of Whitney’s actual intentions before she died, the language in the will controlled what happened.
So Bobbi Kristina gets her money as scheduled, and Cissy, Pat and the rest of the Houston family members can do nothing about it … although Pat did file for a restraining order against Nick Gordon at one point after a fight at a family gathering.
If Whitney’s intention really was for Bobbi Kristina to receive the money when she became more mature, then Whitney fell victim to the same estate planning mistake as her father. It’s critical for every adult with assets of any significance (not just millionaires) to use properly-drafted — and updated — wills and trusts to make sure that their wishes are followed.
Doing the right estate planning is truly an act of love for the next generation … whether you’re a celebrity or not.
Celebrity Legacies is a documentary series airing on the Reelz cable channel, featuring Danielle and Andy Mayoras and other experts, to explore the lives, legacies, and estates of a different celebrity each week.
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.