The world was shocked with the tragic death of iconic superstar Whitney Houston. Her passing was unexpected, and the fact that she had estate planning in place was surprising to many. One of the bright spots in this sad story is that she planned for the unexpected such that her family would have guidance as to the distribution of her assets. According to various news agencies, Whitney Houston’s estate is reportedly worth $20 million to $115 million, and due to the popularity of her music and movies, then and now, it likely will continue to grow.
Examining Whitney Houston’s estate documents can help us learn about what she did right and where she potentially could have made updates. Of course, it was her decision to make changes to her estate plan. However, her life situation is similar to the everyday issues that arise for many individuals, and therefore, helpful to review for decision-making purposes in how to maximize distributions to loved ones.
Whitney Houston executed a last will and testament at a young age and prior to the birth of her daughter, Bobbi Christina. The will created a testamentary trust that gave her daughter a lump sum of money when she turned 21 years old, with another sum to be distributed when she turned 25, and the balance at age 30. The trust provided for discretionary distributions of income and principal, and allowed flexibility for life events, such as marriage, birth of a child, and the purchase of a home. In structuring her estate in this manner, Whitney Houston was prudent to withhold distribution for the majority of her assets. Unfortunately, due to the untimely death of her daughter, she would not receive the entire inheritance, but did provide an alternate plan if there were remaining trust assets.
A few items were surprising as Whitney Houston’s planning became known after her death. For example, given her celebrity status, one may question why she chose to do a will whereby her documents became public and there was no privacy regarding the distribution of her estate. Also, the will goes through the probate court and incurs costly fees and expenses through the administration process. Potentially, individuals in this situation could create a living trust and avoid the public probate proceedings.
In addition, after Whitney Houston divorced her husband, Bobby Brown, she did not update her documents. She may have intentionally chosen to leave it alone, but this calls into question if the same individual should serve as guardian or conservator in the case of divorce. Also, Bobby Brown was mentioned in the will to receive assets in the situation where Whitney had no living children at the time of her death.
Further, Whitney Houston’s success left a legacy worth millions, which is subject to estate taxes. In this situation, there are various estate tools that may be utilized to help minimize taxes to help pass along the maximum amount of assets to loved ones. Again, Whitney Houston may have been aware of this and chose to leave things as is, but individuals should be cognizant of the estate tax laws.
After a major life event or every few years, it is recommended to review your estate plan to ensure it fits with your current wishes and circumstances, and coincides with other legal documents.
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