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  • Writer's pictureJenny Rozelle, Host of Legal Tea

Celebrity Estate Planning - Philip Seymour Hoffman - Episode 20

Hey there, Legal Tea Listeners! This is your host, Jenny Rozelle. We’re back to “estate planning of the rich and famous” where we chat about celebrities and their estate planning. Today’s episode is on the great actor Philip Seymour Hoffman, who is most known for his acting roles in movies such as: Twister, The Big Lebowski, Almost Famous, Along Came Polly, and even in Hunger Games. He was in several, several other movies, but you get the point – he’s a well known fella!

According to Philip’s Wikipedia page, Philip had been in a relationship with a woman named Mimi O’Donnell, who was a costumer designer, for several years. While they never married, they were in a relationship for nearly 15 years. Together, Philip and Mimi had three children – one son and two daughters.

Philip was interviewed by 60 Minutes, a tv show, in 2006, and he shared he had abused drugs and alcohol while he was in New York for college. After he graduated from New York University, he took part in a rehabilitation program when he was 22 years old – thereafter, he was sober for 23 years. Unfortunately, he relapsed in 2013 and he entered a rehabilitation program for 10 days. This is the year, too, that Philip’s Wikipedia page, too, shared that Philip moved out of he and Mimi’s residence “to protect their children from the effects of his relapse.”

Tragically, not even a year later, Philip was found in his Manhattan apartment’s bathroom dead at the age of 46. It was released that many of Philip’s friends thought that his drug use was “under control” but when searching the apartment following his passing, law enforcement found heroin, prescription medications, and that Philip was even found with a syringe still in his arm. His death was ruled an accident.

According to a blog by Tuller Law, an estate planning firm in San Francisco, California, following Philip’s passing, a Last Will and Testament was discovered. That Will got filed in probate court, as Wills do, and nearly instantaneously, The New York Post published the document online. Unfortunately, when a Will gets probated, the probate process is a public process meaning anyone can access “what’s going on” in the Estate – obviously see documents like a Will, see who beneficiaries are, see “how much” is going through the Estate, etc.

Further, according to Tuller Law’s blog, Philip’s Will was executed and finalized in October 2004, which was after he and Mimi had their son, but before they had their two daughters. With his passing in early 2014, ten years had passed since Philip had drawn up his Will and within that time, that’s when:

1. He, of course, had two additional children with Mimi – the two daughters; 2. He had won an Oscar for “Best Actor” for his acting in the film, “Capote.” 3. He had accumulated much of his wealth (which at the time of his death was $35M at his passing) during this ten year window.

That is a lot going on, right?! Why he didn’t get his Will updated to “deal with” the addition of two kids + adding significant wealth, we’ll never know… Though, what we do know, according to Tuller Law’s blog, is that Philip’s Accountant repeatedly recommended that Philip do additional estate planning (beyond “just” a Will) to keep his estate private and protect his children by using a Trust. According to the Accountant, Philip ignored his advice – and according to a Kiplinger article, Philip supposedly did not want to do additional planning because he did not want “trust fund kids.”

Instead, his Will left a majority, if not all, of Philip’s Estate to Mimi rather than his/their three children. It’s said he left everything to Mimi to “take care of their kids.” I hear my own clients say similar things often – “Oh, I’ll leave it to so-and-so and trust them to take care of so-and-so.” Well, first, they don’t have to … meaning they’re not obligated to. They could take the money and run. Though, another risk and concern would be – what if Mimi gets remarried? What if Mimi gets remarried, changes her Will to include the new spouse, and the new spouse doesn’t take care of her and Philip’s kids? Well, there goes Philip’s money down a completely different bloodline…

According to a CNBC article, it was reported that the attorney that drafted Philip’s Will primarily worked in the real estate law field rather than estate/estate planning field. I’m not sure if this is common knowledge or not, but attorneys do not have to “stick to one lane.” Attorneys are trained in law school much differently than Doctors in med school – you know how Doctors end up declaring a specialty, spending time gaining practical experience in the specialty via residency, etc.? Well, in law school, we get trained on the many, many types of fields – and do not have to stick to a specialty. I personally think this is problematic – because of examples like Philip.

I have to think that had Philip landed in the hands of an estate/estate planning lawyer, that attorney could have counseled Philip on the ways to accomplish his goals – “trust fund kids” has a reputation, I know it does. However, I’ve created Trusts for people that have $40,000 TOTAL to their name … and created Trust for people that have millions of dollars to their name … it does NOT matter how much money you have, it matters what you’re trying to accomplish. Trusts are actually very regularly utilized for people like you and I, families like you and I, to induce or not induce behavior.

For example, according to Estate Planning & Elder Law Services, a law firm in Michigan, Philip wanted to make sure his children were exposed to “cultural opportunities” – instead of leaving “everything to Mimi” with the MERE hope that things work out and don’t go sideways, Philip could have created a Trusts or Trusts for his kids to be utilized for travel to “cultural institutions in New York, Chicago, Paris, or wherever, and for tickets to plays, museums, concerns, as well as art, music, or acting lessons.”

Of even on a more basic level, Trusts are regularly-used by people to merely avoid probate – to keep things PRIVATE, so nosy neighbors can’t see what is going on. I bet if you got on your local recorder’s office, started poking around to see how properties around you are owned, you would see “normal” people have Trusts – and they have their house and property in Trust. They do this often to avoid the probate process.

Perhaps one last thing that Philip missed with his estate planning was protection against estate taxes – you see, whether you like to hear it or not, there are ways in my little estate world that allow for estates and trusts to pass without getting hit too hard (or at all) with estate taxes. There are several tools to pass inheritances to beneficiaries, and pass those in tax-friendly ways. I referenced earlier that Philip’s Estate worth was around $35M – well, after Philip passed away, his Estate paid about 1/3 of the Estate to Uncle Sam/IRS in estate taxes. So, had he done some solid estate planning, his Estate could have passed tax-free or at least paid a WAY smaller tax bill.

Furthermore, you may have heard of people or know a couple that has gotten married to gain various benefits – legal benefits, tax benefits, etc. Well, had Philip and Mimi gotten married and if Philip still wanted to pass his entire Estate to Mimi, it could have passed likely estate tax-free to Mimi had they been married. Though, because Philip was considered “single” when he passed away, his estate tax exemption was significantly less than it would have been had he and Mimi been married. By way of an example, here in 2021, the current estate tax exemption amount is around $11M PER PERSON – so, as a married couple, you get two of those $11M estate tax exemptions meaning that you get a $22M exemption. Sheesh!

All in all, because Philip failed to have an estate plan that really covered all the bases, the following happened after Philip passed away:

1. The Estate paid hefty legal fees to go through probate; 2. The Estate paid hefty taxes to the IRS (estate taxes, specifically); 3. There’s no requirement or expectation that his children honor Philip’s wish to use the money “wisely” for cultural opportunities; and 4. With everything going Mimi’s way, we’ll have to see if she ever gets remarried … I hope Philip’s money is not at risk of going down another bloodline.

Shew-wee! That’s a lot to take away from Philip’s estate planning – or rather, lack thereof. When you decide to get the ball rolling to #DoYourEstatePlan, please, please, please 1) work with a qualified estate planning attorney (Philip worked with someone that was not in the “estate planning wheelhouse” and 2) don’t head into the conversation with him/her with pre-conceived notions (Philip didn’t want his kids to be “trust fund kids”).

The role of the attorney is to gather information about your family/beneficiaries, gather information about assets, and gather what the goals are – and from there, present options to satisfy those goals. I had a client, oh about a year ago, that we had their first meeting and they had shared with me at the end of our meeting that they were going to be “interviewing” other attorneys – that’s code for “price shopping.”

Anyway, so about 2-3 weeks after their meeting, I heard from them and they said, “Jenny, you weren’t the cheapest on the block, you weren’t the most expensive on the block, but you were the ONLY ONE that took the time to explain the options and how EACH option impacted our family and goals.” One would think that would make my heart smile – but it really didn’t. In fact, it, sort of, pains me to hear that the other attorneys they “interviewed” didn’t explain options thoroughly. What a classic case of quality … rather than cheapest.

Alrighty, let’s wrap this episode up! So, next week’s topic is a cautionary tale – a real-life case I’ve personally worked on. Since next week is Thanksgiving week, we’re going to be talking about family, family members – gotta love ‘em, riiiight? Riiiiiiight. Then, when you add blended family .... you could end up as a cautionary tale.

Until then, Legal Tea Listeners…take care and be well!


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