Boulder Estate Planning Legal Blog
Robin Williams was THE comedian if you are a Gen-Xer like me. We grew up watching Mork & Mindy. And those of us who live in Boulder have, since his death, gone by the Mork & Mindy house and said our farewells there. What do we have to criticize about Robin Williams’ Estate? First, let me make my motives clear.
They say that in the past Robin Williams had battled depression and substance abuse and that he had recently received a diagnosis of Parkinson’s, which often brings treatment-resistant depression with it. As someone with bipolar disorder who has experienced serious and treatment-resistant depression, I can relate. When the doctors can’t help and everything hurts, a person reaches a point where it’s hard to believe that this horrible painful state can ever improve.
It’s hard, as someone who wasn’t in Mr. Williams’ inner circle, to imagine him depressed. As a fan, I always saw him the way his director wanted his character portrayed or, when he was doing stand-up, as his “on” self. But I also saw the kindness of spirit his actions evidenced.
Did you know that on September 11, 2001, he gave blood instead of staying glued to his TV like the rest of us? Within three days, he was at ground zero, heartening the police and firefighters there who were doing the gruesome and heart-rending work of finding the bodies of the victims. Mr. Williams was involved – seriously involved, with his time, not just his money – in something like 30 charities.
So I don’t write this blog article, examining Robin Williams’ Estate, in a laughing mood. I’m not writing to poke fun. I’m writing because if a wealthy, presumably well-advised, celebrity can make these obvious mistakes in his estate planning, then so can you, or your parents, or your kids.
I am sure that good things will continue to come from his time on this planet with all of us. Maybe one of those good things will be better estate planning for Gen-X’ers and Williams’ other fans of all ages. Already I’ve seen people treating depression differently, more like the illness that it is and less like some kind of character flaw or weakness.
Here are the lessons I’ve pulled from what has come out about Robin Williams’ Estate in the weeks after his death:
1. Lack of Privacy
How is it that copies of Robin Williams’ two trust documents for his three children are all over the internet right now? It’s because the trust documents were incomplete.
They both named the same two co-trustees but provided no instructions in the event that one of those co-trustees was unable or unwilling to continue to act in that role.
In fact, one of those co-trustees died and the trusts were silent about who was to be trustee in that case. (Williams had funded the two trusts during his lifetime, probably for tax planning reasons, and they were irrevocable, meaning that Williams could not name new trustees himself.) Once a co-trustee died, the other co-trustee had no choice but to go to court and seek the court’s order naming a new trustee or co-trustee.
Once the matter is taken to court, the trusts become a matter of public record and are available to any conman, tabloid reporter, or inheritance-seeker who wants a copy.Williams’ loss of privacy could have been avoided if he had:
(1) named backup trustees and specified what was to happen if one of the co-trustees became unable or unwilling to act; and/or
(2) named a trust advisor who had the power to name trustees in the absence of a trustee able and willing to act.
So far, it appears that Williams learned his lesson as none of his other estate planning documents has leaked. In fact, it looks like he had a fully funded revocable living trust plan. If he had had a will-based plan, the will would probably have been filed by the family by now and, as it would be a matter of public record, the tabloids would have found it. Good job the second time around, Robin.
2. Generic Distribution Ages
Although I’m relying on the public trusts for this information, there is no reason to think he created any later trusts any differently. He directed that the trusts be distributed in thirds at ages 21, 25 and 30. That is a very generic choice of ages. It’s on hundreds of thousands of trusts for hundreds of thousands of very unique and individual children. How many of them are really mature enough to handle a third of everything they are ever going to inherit from their parents at age 21?
How would you have handled that sum of money when you were 21? What would you have done with it? Would you have saved it for retirement? Can you think of anyone you know who would have used all that money to buy drugs and maybe have harmed themselves irreparably?
If you think you would have spent it on your education, then don’t worry, you would not have been harmed by a later distribution age or scheme. That’s because most trusts include provisions that allow distributions to be made before and between those distribution ages for “maintenance, education, support & health.” Generally that phrase has been interpreted to mean that the beneficiary can receive money for reasonable living expenses, education and medical expenses.
At Braverman Law Group, we’re more thoughtful about choosing ages that really work for our clients’ unique family arrangements based upon their children’s maturity levels and knowledge and interest in finance, the availability of friend or family mentors for their children, and other factors.
We also tend to use those ages in a unique and very different way. Rather than forcing a distribution of a huge portion of a child’s inheritance, we allow the child to continue to benefit from the asset protection available only to money in trust while gaining more control over the trust (for example, by being a co-trustee).
Remember, with the ability to distribute for maintenance, education, support and health, the child lacks for nothing essential. So, rather than distributing one third or one half of the trust at a particular age, we keep the money in trust where it is protected from creditors, failed business plans, divorces, bankruptcies or other financial problems and disasters, while giving the child gradually more control over that money as she gets older.
Eventually, the child becomes the sole trustee, has total control over the money, but it is still protected from financial disaster by the trust. (More than a few clients have asked if they can make a trust like that for themselves. Unfortunately we have to tell them it’s not nearly as easy to do it for yourself as it is to do it for someone else.)
We have no way of knowing whether Williams changed this provision to something more suited to his particular children and the financial challenges each one of them could be facing at distribution time, aged 21, 25 or 30. Let’s hope he got better advice and did change those provisions.
Oh, Robin, why didn’t you let me do your estate plan? I would have been delighted to! And I used to live so close to L.A.! But not to your Napa Valley residence… so maybe I wasn’t the most convenient attorney… we could have done the planning by Skype!
