Robin Williams' estate plan is back in the headlines: This time, his beneficiaries are embroiled in a legal dispute over the interpretation of the late comedian's trust.
Readers will remember
InvestmentNews' August story on Mr. Williams'
estate plan and the need to keep private matters private. This latest feud puts a few more details out
in the open.
(More: 7 biggest celebrity estate planning lessons of 2014)
On Dec. 19, 2014, Mr. Williams' widow, Susan Schneider Williams, filed a petition with the Superior Court in San Francisco seeking clarity over the terms of a trust that was to be created for Ms. Williams. The widow alleges that the trust documents call for the couple's home in Tiburon, Calif., and its contents to be used to fund her trust.
Per the petition, Mr. Williams had also outlined specific gifts of personal property — including his clothing, jewelry and personal photos that predate his marriage to Susan Williams, as well as his memorabilia and awards — to go to his three children from two previous marriages, Zachary Williams, Zelda Williams and Cody Williams.
Now, Ms. Williams and the Williams children are at loggerheads: The widow claims that, as written, the trust's use of the term “memorabilia” is limited to “items in the entertainment industry,” and excludes the comedian's other belongings — which the children say include collections of graphic novels, bikes and Japanese anime figurines. Ms. Williams also alleges that “jewelry,” in the context of the trust, does not include Mr. Williams' watches.
(More: Lessons from the $1B divorce case: How to split business assets)
Countering the widow in a Jan. 21 filing, the children argue that “memorabilia” includes their father's mementos and not just items related to his work in the entertainment industry, and that “jewelry” includes the watches.
The children's attorneys are also calling on the court to order Ms. Williams to produce an unredacted copy of the prenuptial agreement, which “may make clear Mr. Williams' intent to gift to the Williams children and not to petitioner — all of his memorabilia and jewelry, including his watches.”
Meredith Bushnell, the attorney representing the Williams children, had no additional comment.
“By way of example, his kids get the memorabilia, but does the bicycle collection count as that? The kids get the clothing, but does that include the wedding tuxedo he wore when he married Susan?” asked James M. Wagstaffe, who is representing Ms. Williams.
“That's an example of the ambiguity, and we're petitioning the court for instructions,” he added.
EVERYDAY ITEMS
In everyday practice, it's easy for estate planning clients to overlook items that on the surface don't appear to be especially valuable. But when emotions are running high, and the situation is further complicated by multiple marriages, advisers should expect even the most humdrum items to ignite feuds between beneficiaries.
“Sometimes those mundane objects are the most hotly contested items,” said Bernie Kent, senior adviser at Schechter Wealth. “I know many people who spend a considerable amount of time and agony over that, being concerned over who gets jewelry.”
Mr. Kent notes that sometimes clients determine — while alive — who receives what by permitting the children to select their favorite personal effects. Whoever is “up” or “down” more in terms of the value of those items can be in line to receive more or less cash to make up the difference.
With multiple marriages and multiple homes, however, the picture becomes much more complicated. That will require estate planners and clients to specifically call out in their documents who will receive what.
(More: Joan Rivers' estate planning gambit: A New York state of residence)
“To me, it's of paramount importance to think with great specificity where you want the property to go and where to lay it out,” said Laurie Ruckel, partner at Loeb & Loeb. “You have to be careful when you word it so there is no room for manipulation.”
Be aware of a clause that says “all tangible personal property” goes to either the spouse or the children. A fine piece of art that is disproportionately valuable could end up lumped in with the house under a tangible property distribution, Ms. Ruckel noted.
Another tough situation: A client with multiple homes indicates in his estate planning documents that all the art and personal property in the primary residence will remain with his spouse who resides there. All the art in the other homes go to the children from the previous marriage, per the estate plan. Naturally, that can go wrong, noted Andrew M. Katzenstein, partner in the personal planning department at Proskauer Rose.
“The wife took the art off the walls in the other homes, built a structure to house it in her principal residence and said, 'The will says I get it, so I get it,'” he said. “If it's drafted right, the document says she gets the things in the house that she needs for daily living, and the kids get everything else.”
PLANNING STRATEGIES
Aside from calling out the specifics of who gets what, consider strategies that will permit the second spouse to stay in the home.
Mr. Katzenstein recommends a qualified terminable interest property trust, or QTIP, for the house. The recipient spouse can live in the home for the remainder of his or her life, at which point the property can pass to someone else (perhaps the children from the previous marriage). The furniture and other tangible property for daily use in the home can also go to the spouse for his or her use.
Further, be aware of the prenuptial agreement in the event of a second marriage. “A typical prenup says those things that I acquired prior to this marriage are my sole and separate property and, when we marry, those things we acquire after are community property,” said Charles Douglas, editor of the Journal of Estate and Tax Planning. Normally, that “sole and separate property” that predates the marriage is property that will be left to the children from the previous marriage.
“It's not uncommon for a prenuptial agreement to incorporate or address some provisions of a will,” Mr. Douglas said.
Prenups also allow the more moneyed spouse to give the new spouse incremental additions under testamentary disposition based on the length of the marriage, Ms. Ruckel said.
ANTICIPATE CONFLICTS
When drafting the estate plan, think about heading off conflict in the trust's language. “Put yourself in the shoes of each side and see how they can twist what is a normally standard provision,” Mr. Katzenstein said. “Anticipate how they would twist it, and clarify so there is no doubt.”
“The most important job the estate planner can do is to avoid fighting on the back-end, anticipate where it might come and draft for it so you head it off at the pass,” he added.
