Walnut Creek Estate Planning Attorney Comments Did Debbie Reynolds and Carrie Fisher Protect Billie Lourd, Carrie’s Daughter, with the Right Estate Plan?
In late December, the world was rocked and saddened by the passing of not only one screen icon, Carrie Fisher, but also her mother, actress Debbie Reynolds. Losing two generations back to back will strain even the most robust estate plan.
Kirsten Howe, one of East Bay’s leading estate planning and administration attorneys, said, “Family members can pass quickly after the loss of a loved one. But, often, this is most common with long, close marriages of spouses who are in advanced years. When one spouse passes, it is not surprising that, many times, but not all the time, the surviving spouse or widow, passes within a year or so. In the case of the Star Wars princess, Fisher, and her mother, Debbie Reynolds, however, this was mother-daughter, not spouses. This quick succession of death in a family can cause people who are planning their estates to take pause. After all, this was not a case of two long-married spouses. And this was not the case of the surviving spouse passing away in the following year. This was mother-daughter and days.”
News reports estimate that Carrie’s estate is valued at somewhere between $5 million to $25 million. Her mother, Debbie’s estate, is larger, valued at between $60 million and $85 million. Neither of these ladies was married at the time of their passing. It appears both Carrie and Debbie had executed a trust. But did they set up the trust in the right way to protect their daughter and granddaughter?
Kirsten adds, “While reviewing estate plans, I often come across the stereotypical trust that gives beneficiaries access to the funds at a certain age. Probably the most common trust provisions I see drafted by other attorneys is 50% of the assets at age 25 and the balance of the trust at age 30 – or, 20% at 21, 50% at age 25 and the balance at age 30. The problem with these types of trusts is that if the beneficiary gets sued, goes through a divorce, has a bankruptcy or some other creditor issue, the trust could be exhausted and attached by a creditor in a legal proceeding. Another major issue is that the beneficiary may not be in a position to adequately manage the wealth at a young age, they could waste the assets, or they could hurt themselves with the money.”
It is unknown at this time whether or not Billie Lourd will have full access to the money set aside for her from both her grandmother Debbie Reynolds’ estate as well as her mother’s estate. She will likely inherit 100% of mom Carrie Fisher’s estate ($5-25 million) and Carrie Fisher’s half of Debbie Reynolds estate ($30-40 million dollars). That’s a lot of money to be in control of at the age of 24.
Kirsten continues, “Hopefully Carrie and Debbie had smart legal counsel and did not put Billie in charge of that money or with any demand rights against the Trustee for that money until some later time when she’s more mature. This is the nuts and bolts of designing wills and trusts. The aim is never leave it up to chance or to state intestacy laws. Most consumers would benefit from more detailed succession planning, and it’s especially important for high net worth individuals, those in second marriages, those with few intended heirs and people whose heirs include either very young children or someone with special needs.”
Some of the elements you may want to consider:
Simultaneous death clause
When two parties with intertwined estates die in the same event or accident, it’s not always possible to determine who died first. That can lead to some confusion over who gets what; for example, in a married couple that each named the other as the primary beneficiary.
So-called simultaneous death clauses specify which person should be deemed to have died first, which can be an important consideration for estate taxes and the ultimate direction of the bequests.
Specify in your will or trust that “all bequests are subject to the condition that the legatee survives me” by a particular period of time, often at least 30 days, but in some cases a longer survivorship period is desirable.
Wills and trusts should have default beneficiaries, in case the intended beneficiaries predecease the testator.
Note in your will whether there’s a point — even three or four heirs deep — at which you’d rather have your assets pass to an entity like your alma mater, church or a favorite nonprofit rather than a very distant relative.
Watch those beneficiaries
Insurance policies and qualified retirement plans, among other assets, pass automatically to the named beneficiary on that account, regardless of what your will dictates. Name a primary and a contingent beneficiary on such accounts, and keep those up to date.
Be cautious about naming your estate or your trust as a beneficiary. Particularly with retirement assets, it is very important to consult with an attorney in order to avoid unintended consequences.
When your beneficiary is a minor or an individual with special needs, think about whether it might make sense to have that money put in trust for their benefit rather than be awarded directly to them. That ensures the money isn’t squandered and prevents negative impacts to any government benefits eligibility.
Consider how jointly owned assets are titled. Couples often opt for “joint tenancy with right of survivorship” or “community property with right of survivorship” to avoid probate, but that can be problematic in simultaneous death cases.
Decide how your estate will be distributed if a beneficiary with children dies before you do. Dividing an estate “per stripes” means each of that deceased beneficiaries’ heirs will split his or her share. Other wording might limit inheritance only to named beneficiaries in a particular class (meaning you’d effectively shut out a deceased child’s children) or split the share by a person in each generation (so if your two children predecease you, your five grandkids could divide the estate five ways).