Stephen J. Lacey
We count down the last days of 2019, often thinking about the lost. From popular actors like Doris Day and Tim Conway to those I’m too old to know like Disney star Cameron Boyce and rapper Juice WRLD. As an estate planner, I cannot help but learn the lessons. Over the past several years, the deaths of Prince and Aretha Franklin have revealed the dangers of an incomplete estate plan. We also saw the potential pitfalls of a will-based plan after the death of gifted actor Philip Seymour Hoffman.
Mr Hoffman died of a drug overdose in 2014. Upon reviewing his will, two problems immediately became apparent. First, his will was written by a real estate attorney who was unfamiliar with New York tax laws. Second, the will was 10 years old and accidentally excluded Mr Hoffman’s second child born after the will was signed. Rumor has it that Mr. Hoffman’s net worth is around $ 35 million. The will left the entire estate of his longtime partner / mother of his children, Marianne O’Donnell. An attorney specializing in estate planning would likely have found that New York State does not recognize common law marriages and would have included provisions in Mr. Hoffman’s will to protect O’Donnell from massive state and federal estate taxes. Unfortunately, Mr. Hoffman’s attorney failed to do so, and as a result, Mr. Hoffman’s family members can lose one-third to one-half of their entire estate in taxes. As an estate planner, it saddens me to think how easily this loss could have been mitigated or avoided.
Ric Ocasek, lead singer in the popular 80s band The Cars, died last September. Anyone growing up in the 80s will remember when the skinny singer married supermodel Paulina Porizkova. Their marriage lasted legally for 30 years, until Ric’s death. Unfortunately Ric and Paulina had been separated for three years. Weeks before his death, Ocasek drew up a new will stating: “I have made no provision for my wife Paulina Porizkova because we are divorcing.” The will also said: “Even if I should die before our divorce is final … Paulina is not entitled to a share of the vote … because she has left me.”
By adjusting his estate plan to deliberately disinherit his wife, Ocasek avoided a scenario in which his estranged wife would receive the entire estate.
Ocasek is fortunate that the above regulations in New York may be enough to disinherit Paulina. In Florida, the Ocasek language would not result in complete disinheritance because of the electoral application. Florida Elective Share provides a surviving spouse with a mandatory minimum share of their deceased spouse’s estate, regardless of what the estate planning documents say. As a rule, the elective share does not include less than 30% of the assets of the deceased spouse. The right to the electoral share exists until the final divorce decree.
While you can’t completely disinherit a soon-to-be ex-spouse before finalizing your Florida divorce, there are planning options to ensure you are in control of the ultimate disposition of your property. When properly performed, a voter participation fund allows you to meet a spouse’s voting rights while retaining the right to direct distributions of any unused amounts upon the death of your spouse. This can be especially useful in a second marriage with separated children.
During the holidays, consider with your family that your estate plan is exactly what you want and that your loved ones are protected. Securing a future for your loved ones is a gift that can hardly be beaten.
Stephen J. Lacey, JD, LL.M-Tax, Partner, is with the law firm Rossway Swan Tierney Barry Lacey & Oliver.