Larry King's 2019 "Hand-written" Will Omits Wife and Splits His $50M Estate Among His Children

Celebrity estates create interest in estate planning, and are often object lessons in either poor or exceptional estate planning. The estate of late broadcasting legend Larry King, is no exception. 

King died of sepsis on January 23rd at the age of 87. King reportedly left behind a hand-written Will "advising for an even split of his fortune to his five children in the event of his death." Larry King was reportedly worth around $50 million at the time of his death. 

The Will was reportedly written on October 17, 2019, coming just two months after he filed for divorce. His seventh wife (whom he intended on divorcing), Shawn Southwick, was entirely omitted from the handwritten Will. 

The document reads, "[t]his is my Last Will & Testament. It should replace all previous writings." The Will stated that King wanted "100 percent of his funds to be divided equally among my children Andy, Chaia, Larry Jr., Chance, and Cannon." King's son Andy passed away of a heart attack in July 2020 and his daughter Chaia, died in August after being diagnosed with lung cancer. 

There was no clear reporting whether the Will was admitted to probate, and of course, at this early date, whether King's wife (intended ex-wife) will contest the Will or exercise what may be her spousal rights under state law.  

Source: Tracy Wright, "Larry King left a 'hand-written will' in 2019 seeking equal split of his $50M fortune to his five children... and leaves out ex-wife Shawn," Daily Mail (U.K.), February 11, 2021. 

IRS Contests Value of Prince Estate, Who Died Without A Will Claiming Estate Worth $163.2 Million

The ongoing controversy over the money left behind by Prince when he died without a will is heating up again after Internal Revenue Service calculations showed that executors of the rock star's estate undervalued it by 50 percent, or about $80 million.

The IRS determined that Prince’s estate is worth $163.2 million, overshadowing the $82.3 million valuation submitted by Comerica Bank & Trust, the estate’s administrator. The discrepancy primarily involves Prince’s music publishing and recording interests, according to court documents.

Documents show the IRS believes that Prince's estate owes another $32.4 million in federal taxes, roughly doubling the tax bill based on Comerica’s valuation, the Star Tribune reported.

The IRS also has ordered a $6.4 million “accuracy-related penalty” on Prince’s estate, citing a “substantial” undervaluation of assets, documents show.

Prince’s death of a fentanyl overdose on April 21, 2016, created one of the largest and most complicated probate court proceedings in Minnesota history. Estimates of his net worth have varied widely, from $100 million to $300 million.

With Prince’s probate case dragging on, his six sibling heirs have grown increasingly unhappy, particularly as the estate has doled out tens of millions of dollars to lawyers and consultants.

Comerica and its lawyers at Fredrikson & Byron in Minneapolis maintain their estate valuations are solid. Comerica sued the IRS this summer in U.S. Tax Court in Washington, D.C., saying the agency’s calculations are riddled with errors.

“What we have here is a classic battle of the experts — the estate’s experts and the IRS’ experts,” said Dennis Patrick, an estate planning attorney at DeWitt LLP in Minneapolis who is not involved in the case. Valuing a large estate, Patrick added, “is way more of an art than a science.”

Comerica, a Dallas-based financial services giant, has asked the tax court to hold a trial in St. Paul. A trial could dramatically lengthen the settlement of Prince’s estate and generate more legal fees at the expense of Prince’s heirs, Patrick said.

Source: NBC News  

Picture: Photo 22858528 © Furesz | Dreamstime.com

Astronaut Buzz Aldrin Subject of Guardianship Dispute

Buzz Aldrin: en.wikipedia.com

Astronaut Buzz Aldrin is fighting an attempt by two of his three children to place him under involuntary court-appointed guardianship, according to the Washington Post. The eighty-eight year old, the second person ever to walk on the moon, denies that he is incompetent, and is suing his children, and a former manager, for elder exploitation, financial abuse, and defamation.

Aldrin's children claim that they only are trying to protect the legendary astronaut, who they claim is paranoid and in cognitive decline.  An ABC News report suggests that the family dispute actually began in 2016 after Aldrin collapsed while on an expedition to the South Pole, and had to be evacuated.  The children allegedly sought to limit his activities after the incident, including curtailing what they saw as a lavish lifestyle.

According to the Wall Street Journal,  Aldrin voluntarily submitted to a mental evaluation in April, and passed with flying colors.  An independent doctor determined that Aldrin remains "cognitively intact and retains all forms of decisional capacity." 

Of course, the children blame the lawsuit and allegations of financial exploitation on Aldrin's lack of capacity.  “Let it be clear that every one of these allegations are products of the increased confusion and memory loss that Dad has demonstrated in recent years,” Andy and Jan Aldrin told the Washington Post.  They claim that Aldrin started associating with a third parties who were “trying to drive a wedge between Dad and the family,” Andy Aldrin said. The siblings said they would not allow “opportunistic agents to grab the spotlight, break our family apart.”

Buzz Aldrin has walked on the moon, received both the Distinguished Flying Cross in the Korean War and the Presidential Medal of Freedom, and visited the White House.  He frequently discusses space exploration, and envisions humans living on Mars.  

The Wall Street Journal observes that Aldrin's "legacy in space is secure. On earth it’s another matter." Perhaps in space, there will exist a better system for dealing with allegations of cognitive decline, and a system preventing third party control of a person's financial and non-financial legacy. 

Article: Philip Seymour Hoffman’s $12 Million Estate Planning Mistake

Attorney John M. Goralka has written an excellent article for Kiplinger, entitled, Philip Seymour Hoffman’s $12 Million Estate Planning Mistake.   The article teases, "A few moves could have saved the loved ones of actor Philip Seymour Hoffman a lot of money. Even if you don’t have a $35 million estate, like Hoffman’s, there are some things you could learn from it."  Attorney Goralka is correct.

The article: 

Philip Seymour Hoffman was one of my favorite actors. He starred in Charlie Wilson's War, Hunger Games, Pirate Radio and many more major movies. His roles covered a wide range, from a priest in Doubt to a coach of the Oakland A's in Moneyball, which evidenced his unique ability as an actor.

The lack of planning results in his estate owing estate tax of approximately $12 million. If Philip had married Mimi, his family would have saved approximately $12 million and paid no estate tax whatsoever.

Philip also stipulated that funds were to be used for his kids to visit major metropolitan areas for the express purpose of providing his children with access to the arts. This is an example of an incentive provision or trust to help motivate his kids to become the adults that Philip wanted them to become.

The use of a will requires probate, resulting in delays, additional costs and public proceedings. For example, the probate costs for “ordinary services” in California, where I’m based, amount to largely statutory fees, resulting in approximately $376,000 for the first $25 million in estate value and an additional "reasonable amount" to be determined by the court for the remaining $10 million of estate value if that probate is based in California. Those fees are based upon the gross value of the assets without any reduction for liens, selling costs or mortgages. In addition to the statutory fees for ordinary services, extraordinary fees are paid for services related to the sale of real property or a business, tax matters, debt collection or negotiation.

Additional costs for a "living probate" or guardianship for each of the three children may also be required. In California, this typically would require a court appearance and fees every two years until they each turn 18. Fees can be substantial and will vary based widely upon the circumstances and needs of the minor child and the value, type and number of assets involved. They would receive any share of assets to be distributed to them at that time. Not a good age to receive significant wealth. Complete access to funds may result in his kids becoming the trust fund kids Philip hoped to avoid.

An average probate in California without litigation or other issues takes between nine months and 1.5 years. Philip's probate will almost certainly take longer due to the size and complexity. After the probate is completed, Philip's estate will be at risk after distribution to Mimi if she is sued, challenged by her creditors or even in a later divorce if she remarries. That legacy may also be reduced by a second estate tax on her death.

Philip could have provided for Mimi with a Personal Asset Trust, which would help protect her from divorce, lawsuits by predators or fortune hunters, creditors and even a second estate tax imposed on Mimi when she dies.

The original article is available here.  

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.