The death of pop star Whitney Houston should serve as a reminder to make sure that when you set up a revocable living trust you properly fund that trust; and that you update your estate planning documents every couple years.
Whitney Houston’s sad story is an unfortunate, but educational example of what should be done with an estate plan.
While it is too early to know all aspects of Whitney Houston’s estate when she died, the six-time Grammy winner, who died February 11, 2012 at age 48, had a will that named her only daughter, 18-year-old Bobbi Kristina Brown, as the main beneficiary.
At the very least, hopefully, a revocable living trust was set up and, even better, a series of trusts that are funded by the estate’s assets. This would protect her 18 year old daughter from inheriting everything in a lump sum. It can be unwise to let an 18 year old inherit a lot of money all at once because they are not old enough to appreciate it and may foolishly spend it.
Along with setting up insurance policies to fund the trusts, Ms. Houston should have updated her will, any revocable living trusts and any insurance policy beneficiary designations after her 2006 divorce from Bobby Brown.
Along with divorce, any major life changing event, such as the birth of a child, a move across state lines or remarriage, should alert you to update your estate plan.
Even without such changes, everyone should review all estate planning documents every three years to account for new real estate or business ventures and to make sure that all trust are properly funded and assets are properly transferred to the trust.
The estate planning that celebrities and high-net-worth people require is often complex and time consuming, which is why it often isn’t done or isn’t done right. Celebrities and high-net worth people are used to having things done for them, and they don’t want to devote the necessary time to reviewing their estate planning documents and rely on others to do it. Estate planning may also require celebrities and high-net-worth people to make difficult decisions about whom to support — and with how much. Many celebrities start the estate planning process but never actually finalize it because it is too difficult to make the hard decisions required.
A number of music industry stars have died without even completing a will, including Sonny Bono, John Denver, Jimi Hendrix and Bob Marley.
Whitney Houston, the 20th-top-selling artist in the United States of all time, with 55 million records sold, hopefully realized the importance of proper estate planning. Details of the financial state of Whitney Houston — who signed a $100 million record deal in 2001 but also admittedly suffered with drug problems — are being closely held by the family.
Regardless of its current value, Whitney Houston’s estate is expected to gain from the giant boost in song sales after her death, the upcoming release of a movie she filmed with Jordan Sparks called “Sparkle,” as well as sales from other assets, including a mansion reportedly on the market for $1.75 million.
There will most likely be a seven-figure increase to her estate or maybe more after her death. It is important for everyone, including celebrities like Whitney Houston, to remember that properly setting up an estate plan and continuing to update it every few years does not only benefit and protect the settlor of the estate, it also benefits and protects their family and friends who are the beneficiaries of their estate after the settlor is gone.