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| 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.
