Wills - Mistakes made by the Rich and Famous.
Your will is probably one of the most important documents that you will ever draft as it is your final expression of your wishes and how you would like your estate (your assets less your liabilities) to be distributed. Your will should be drafted within the context of your overall estate plan with a detailed understanding of your total estate i.e. all your assets, deemed assets and liabilities and also taking into account taxes and costs at death. After conducting a detailed estate plan, you will have a better idea of your net estate and what assets are available to bequeath to your legatees and/or dependents.
Let’s consider a few of the important elements of a will by way of a few examples of the “rich and famous” that brings home some important principles in finalizing your will.
1.The importance of having a last will and testament
During your lifetime, you will build up assets and liabilities, which will form part of your estate. When you pass on, your estate will be wound up and distributed in accordance with your last will and testament. A Will is the most important document you require. It expresses your wishes about what happens to your personal assets after death. If it is out of date or unsigned, it can cause practical problems and place surviving family members, dependents and loved ones under immense pressure when you aren’t around to assist them financially or with making decisions about your assets.
When a person passes away without a Will, the law of Intestate Succession will apply. This means that besides the delay that appointing an Executor will cause, the assets will be divided in terms of rigid and inflexible law. This may even have the effect that relatives can be drawn into feuds over apportionment of the estate.
It is important to formalize your final wishes of how your estate (all your assets) should be divided, this not only ensures that your assets are divided as per your intent or objectives, but can also assist in ensuring or minimizing the possibility of family feuds in relation to your estate. This is clearly illustrated in the example of when Prince died in 2016. Prince left an estimated $ 200 million (£ 162m) estate and no will. A judge ruled that his six siblings should inherit his fortune. However, in the wake of Prince's death more than 45 other people are said to have come forward claiming to be his wife, children and other relatives and sought a portion of his estate. The claims are still pending, and his siblings are yet to receive any money from his estate. The most obvious lesson of the Prince tragedy remains, you might leave behind confusion. Prince's assumed massive estate, believed to be worth hundreds of millions, is still unsettled, still not officially valued and still not disbursed to the heirs, his six siblings.
2.Document your claim to an estate
If you are sitting on the opposite side of the table and expecting and inheritance from a spouse, partner, parent or family member, it is also important to ensure that all the promises made have actually been recorded in a valid last will and testament. There are many examples of promises of fortunes, mostly to younger lovers, partners and spouses. In many of these the expecting partner has been left destitute without the promises ever materializing. The most published example is the marriage of the 89-year-old billionaire Howard Marshall to the former stripper and Playboy Playmate, Anna Nicole Smith, 62 years his junior. The marriage lasted for 14 months, ending when Marshall died. Anna Nicole Smith was completely left out of Marshall's will, which left the majority of his fortune to his son. Smith claimed that her deceased husband had promised that he would leave her half of his fortune, but that his son had prevented him from doing so through forgery, fraud, and false imprisonment.
3.Putting pen to paper, the formalities
Once you do put pen to paper to finalize your will, it is important to ensure that your will is valid and will be acceptable in a court of law in case of a dispute. There are a number of formalities to ensure that a will is valid, the most important is in relation to the signing of the will by yourself (the testator) and two independent witnesses, at the same time i.e. the witnesses do need to “witness” you signing the will. This requires that each page of the will is signed by yourself and the witnesses. Many a dispute has risen in relation to the signing of the will and the validity of a will, and this is probably the most contested principle in challenging the validity of a will. The estate of the actor Sir Peter Ustinov (best known for his Academy Award as best supporting actor in Spartacus), was dragged through the courts for years, resulting in most of his multi-million-dollar assets being swallowed up by legal fees. He wrote his will in pencil 36 years before dying in 2004, aged 82. This led to a court ruling that he had died intestate or without a will. He was married three times and had four children, but the bulk of his wealth went to his widow, Lady Helene Ustinov. His children claimed that trusts he allegedly set up should have gone to them, but no one could successfully prove their existence. From the last accounts in relation to his estate in 2017, the feuding family lost his entire estate to the lawyers’ fees, as their nine-year battle over his money continued.
4.Start today, with clarity of mind and purpose
Another formality required in the formal signing and acceptance of a will, is that you need to be competent and able to sign without any undue influence or being coerced into signing your will. It is important to regularly review and update your will. Don’t wait until your estate plan is perfect or think it’s too early or late in the processing of building up your wealth. Most important is that you formalize your intention on the distribution of your assets in drafting a valid will. Ensuring you start this process when you are capable and able to do so , and without any undue influence by a spouse, partner, children or any other party will ensure there is a valid will to fall back on if your final will was signed when you were not competent to do so, or if this was done under undue influence. John Seward Johnson was one of the sons of Robert Wood Johnson, a co-founder of Johnson & Johnson. When he died in 1983 of prostate cancer, he left almost the entirety of his fortune to his third wife, Barbara Piasecka, a former maid 42 years younger than him. Johnson's children immediately contested this, claiming that Piasecka abused their father and "terrorized" him into leaving her all of his money. Three years and $10 million in legal fees later, a judge found that Johnson had not been mentally competent when he signed his will and ordered Piasecka to pay Johnson's children $160 million.
5.Do the appropriate planning, it may be complex
It is important to conduct the appropriate planning and analysis when finalizing your will, your will should be the final part in a financial planning process specifically looking at your estate planning. Your will is the expression of your wishes within the context and understanding of the nett value of your estate. This is best illustrated when looking at the estate of Elvis Presley, where less than 10% of the value is his estate ended up in the hands of his beneficiaries.
Elvis Presley – Estate at death
||$ 10 165 434
||$ 3 878 539
|Admin, Legal & Executor
||$ 1 961 128
||$ 3 339 520
6.Remember your personal wishes
Many have very specific wishes as to what should happen with their human remains after death, it is important to share this with your family and friends. Further, this needs to be stipulated in your will. Your personal wishes may be to be buried, cremated, aqua-mated (aquamation is a gentle process that uses water instead of fire to return a body back to mother nature), preserved in ice, or your ashes disposed of in a certain place. If there is any uncertainty or differences in what your intention was, this can result in unwanted delays and family feuds. Take for example the bizarre case of baseball great Ted Williams.
In 1996, Williams signed a will stating that he wished to be cremated and to have his ashes spread out at sea. After his death, however, the executor of his estate claimed that Williams wanted to be cryogenically frozen. Two of his children supported this action, citing a piece of paper Williams had signed in which the three all agreed to be frozen so that they would, according to an article from the AP, "be able to be together in the future, even if it is only a chance." His eldest daughter fought against the disposition of his body but gave up after running out of money. Williams is currently frozen, with his head separated from his body. His remains are housed at Alcor, which began in California in 1972. The non-profit company's office houses 168 "patients" and 90 pets (cats, dogs, one turtle and one chinchilla), who have died but are being preserved at sub-zero temperatures in a way that may allow them to be revived and one day live again
Your last Will and testament are one of the most important documents that you may sign and will give effect to your wishes and the implementation of your estate plan i.e. how your assets should be distributed or managed on your passing. It is important to have a valid will in place and regularly review this to ensure your last wishes are implemented.
Wynand Gouws, CFP® (MBA, PGD Future Studies)
Wealth Manager, Gradidge Mahura Investments