An Estate Planning Lesson from Robin Williams
Image by @homajob
Reposted article, originally written for bemoneysavvytoday.com.He may have given in to his personal demons, but the late Robin Williams was a responsible man who made sure his family was taken care of, as evidenced by his estate plan.
The 2 things one immediately notices is that 1. Robin Williams appears not to have done a will; and 2. He used trusts to hold his assets and distribute them to his heirs. Now this may seem a foreign concept to Asian parents, who on the whole prefer to maintain control of their assets, but it is definitely an idea that merits consideration.
Wills
Wills are essentially a legal statement by the deceased on how to distribute his assets. Being relatively cheap and easy to draw up, it is utilised by most people in their estate plan. However, it has its drawbacks, some of which are listed below:
A will can be contested. All it takes is a disgruntled heir willing to fight the provisions, and much as the testator (the person who wrote the will) might wish otherwise, the outcome will depend on the court battle.
A will becomes public record after death. This is a concern for wealthy families or celebrities who want to protect their private affairs from public scrutiny.
Assets are not protected from estate tax or creditors. For wealthy families estate tax (in jurisdictions that do have such taxes) can amount to a very substantial amount. But even more important is the fact that creditors can demand payment from the estate, leaving little to none for the family.
Living Trusts
Living trusts are trusts set up during the creator’s lifetime. The settlor (the person creating the trust) transfers his assets to an appointed trustee, whose duty it is to manage the assets and distribute the proceeds (income and/or capital) in a manner directed by the settlor in the trust document. Most people do not utilise this as they are uncomfortable with giving up control over their asset to the trustee. Additionally, they do not relish having to pay the trustee management fees, which is usually a percentage of the asset under management.
However, for people who are concerned with the limitations of a will as described above, a living trust can address these concerns as it cannot be contested, is private and confidential, and is definitely protected from creditors and estate taxes. Additionally, assets held in trusts do not need to be included in the probate process, which means that the family can get the money much faster.
A Last Word
Wills and trusts are tools used in the estate planning process. As with any other tool, its efficacy depends on the skill of the person wielding it. As it can be a highly complex maze to negotiate, it is always advisable to sit down with an estate planner to determine the best way to distribute one’s estate.
A man’s last act often lingers in our minds. What image would you want to leave for your loved ones? The one that Robin Williams left for his children or the one that fellow actor Phillip Seymour Hoffman left?
(https://www.legalzoom.com/articles/how-we-can-learn-from-philip-seymour-hoffmans-last-will)
- Esther Perh
This page is purely for informational purposes only and should not be relied upon as financial advice. The statements and opinions expressed on this page are my own and are not endorsed by finexis.