Monday, July 21, 2014

A Walk on the Wild Side of Estate Planning

Reed performing at the
Hop Farm Festival in Kent, 2011
http://en.wikipedia.org/wiki/Lou_Reed
Danielle and Andy Mayoras wonder, in an article written for Crain's Wealth, why Lou Reed, late lead singer and guitarist of The Velvet Underground, a musician and songwriter with a successful solo career, "would be so careless with his estate plan."  According to the article, probate filings available to the public paint a vivid picture of Lou Reed's estate:
Recent filings with the Surrogate's Court in Manhattan show that Reed's estate has already earned more than $20 million since he passed away from liver disease at the age of 71, on Oct. 27. This is only the income that Reed's estate has brought in since his death, primarily from royalties.
The executors filed a report recently with the court, listing the income and providing an updated inventory of estate assets. There is other property worth around $10 million in Reed's estate. Reed's wife and his sister are the primary beneficiaries, along with a half million dollars set aside for the care of Reed's 93-year old mother. Reed's widow and his sister receive 75 percent and 25 percent, respectively, of the residue, while all of the personal property and almost $9 million worth of real estate in New York will go to his widow alone.
Reed relied on a 34-page will he signed in April 2012.  Apparently Reed was aware he was suffering from liver disease, and he signed his will a year-and-a-half before he passed. 

The article continues:
Why would someone with assets worth tens of millions rely on a will, instead of a revocable living trust, if not even more sophisticated estate planning?  
That's the question that doesn't appear to have a good answer.  If Reed had used a revocable living trust, and transferred his assets into the trust during his life, then all of this information would have been kept private. That's a key difference between wills and trusts. Wills have to pass through probate court (called Surrogate's Court in New York), which is a public process. Trusts, when used the right way, avoid probate court entirely. 
While most people don't have to worry about the press leaking details of their financial worth, everyone should strive to avoid probate court. On top of being public, it's also expensive, stressful, time-consuming, and more prone to fighting.  
It's much easier for disgruntled family members to file will challenges in probate court, as opposed to a trust that is administered privately, outside of court. In fact, trusts can even help you when you are alive by addressing who and how your assets are managed if you are no longer able to do so. Wills can't help with that.

The The authors conclude that Lou Reed should have updated his plan to include a revocable living trust, thereby protecting his family's privacy, and avoiding the aggravation of probate court:
It's a lesson for everyone … even those who don't have more than $30 million. So let Reed stick to walking on the wild side when it comes to estate planning. Talk to your loved ones about the benefits of a revocable living trust.
To read the whole article, click here.

8 comments:

Unknown said...

I want a really good estate planning attorney so my financial situation will be well taken care of. I am looking for a really good attorney near Hastings, Nebraska. Does anyone have any suggestions? I really want to make smart decisions when it comes to things like this.

Brooke Bowen | http://becklawhastings.com/practice-areas

Unknown said...

Thanks for sharing this article. I didn't realize that the difference between wills and trusts was that wills pass through probate court, while trusts don't have to go through that process. I'm trying to help my mom plan her estate before she passes away. We've been debating whether or not she should plan her estate in a will or a trust. I'll pass this information along for her to consider her options.
Paul O. Herman | http://www.lsand.com/Practice_Areas.html

Unknown said...

I didn't even know that Trusts existed. That's honestly so smart. I want to set those up rather than a Will. http://www.mbslawyers.com/page/law/estate-planning

Unknown said...

I am looking for an estate planning attorney. My husband and I are hoping to get everything taken care of while we are both well and young. Thanks for posting this helpful information. Hopefully we get it all figured out soon!

Amber | http://www.meyringfirm.com

Unknown said...

My husband and I are looking into doing our estate planning. We like to be prepared and we are both young and healthy. We want to be prepared in case anything should happen.

Amber | http://www.valentineandvalentine.com

Unknown said...

It is regrettable that Lou Reed's estate has fallen into such chaos. He was an excellent musician, and it is shocking that he did not have his affairs in order. This story has prompted me to hire an attorney to get my own estate planning taken care of.

http://www.stoneattorney.com/estate-planning.html

Unknown said...

This is such an interesting article. I love reading about celebrities, especially when they do things that regular people do like estate planning. My husband and I recently started planning our estate, but I don't think it will be as wild as this story! We are looking into hiring an attorney, so hopefully everything will go smoothly. http://www.gllaw.net/probate-estate-planning

Unknown said...

This is such an interesting article. I love reading about celebrities, especially when they do things that regular people do like estate planning. My husband and I recently started planning our estate, but I don't think it will be as wild as this story! We are looking into hiring an attorney, so hopefully everything will go smoothly. http://www.gllaw.net/probate-estate-planning

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