“Can We Talk” . . .
About Estate Planning for Pets and People
Two celebrities, Joan Rivers and Lauren Bacall, died recently. Both died very wealthy women and their heirs will be well cared for. However, each provided for their loved ones in very different ways.
Because Joan Rivers had a living trust, much of the details of her estate plan are unknown. Living Trusts are not filed with the probate court after death, unlike a Last Will and Testament. In most locations, anyone can access a Will and the accompanying information, while this is not possible with a trust (unless there is litigation).
It is estimated that Rivers’ estate is worth in excess of $150 million. It is believed that she left the bulk of her estate in trust for her daughter, Melissa, and her grandson, Cooper. She also left a pet trust for her four beloved dogs. Many people surmise that Rivers’ longtime assistant, Jocelyn Pickett, was named as the dogs’ caregiver. The job of the caregiver sometimes includes caring for the animals. If the caregiver does not provide actual care, she would ensure that the dogs are well cared for wherever they reside. You may recall that hotel heiress Leona Helmsley provided a suite for her dog, Trouble, at the Helmsley Sandcastle Hotel in Sarasota, Florida, where Trouble resided until Trouble’s death last year. While most individuals cannot provide such luxury for their pets, they can make pre-arrangements to house the animals with friends, relatives or other caring individuals willing to care for the pet. In the alternative, they can utilize the services of a pet adoption facility, such as Best Friends Animal Society or Bideawee, for short- or long-term care of the animals.
Helmsley provided for the trustee of the pet trust to be different from the caregiver. This strategy provides maximum protection for the pet, with the trustee overseeing the actions of the caregiver and the trustee being accountable to the caregiver for the money to be used for the care of the animal. The trust can also provide for contingency plans in case the caregiver or trustee is unavailable to serve. Many pet trusts contain very specific instructions for the care of the animals, including their healthcare and burial, while other pet owners prefer to leave such decisions to the discretion of the caregiver and/or the trustee of the pet trust.
Lauren Bacall’s estate is estimated at $26.6 million, not including a power of appointment she had over a marital trust created by her first husband, Humphrey Bogart. Unlike Rivers, Bacall disposed of her estate by way of a Last Will and Testament, which is currently being probated in the New York Surrogate’s Court. She left the bulk of her estate to her three children, Stephen Humphrey Bogart, Leslie Howard Bogart, and Sam Prideaux Robards. She provided for a few small gifts to employees and gifts of $250,000 each, in trust for her grandchildren. Lauren left her dog to her son along with $10,000 to care for him.
By disposing of her estate through the probate court, Bacall’s assets and debts are public information. The terms of her Will are public record. She named all three of her children as co-executors and requested that all three of them receive full executor commissions for their services. While there may have been a tax strategy involved in doing so (executor commissions are deductible for estate tax purposes), it is usually very cumbersome to have multiple executors, especially if any of them live out-of-state.
By leaving her assets outright to her children, the amount and timing of their inheritances will be common knowledge. While it is known that Joan Rivers intended to benefit her daughter and grandson, the amount that each is to receive in their trusts is not known. An outright distribution to a beneficiary leaves the inheritance subject to the creditors of the beneficiary. A trust for a child or grandchild can be structured to provide financial management, divorce protection, and protection from creditors, if desired.
While it is not known how Rivers’ daughter’s trust is structured, it is possible that Rivers structured her trust to provide her with divorce and asset protection. It is also likely that Rivers provided that any assets remaining in her daughter’s trust after her death pass to her grandson estate and generation-skipping tax-free. By leaving their inheritances outright to her children, Bacall’s children cannot benefit from any divorce or asset protection she could have provided them. Furthermore, when the assets pass from her children to her grandchildren, it is possible that those assets will be subject to a second round of estate tax (both Rivers’ and Bacall’s estates will be subject to estate tax, as they both exceed the amount that can be passed free of estate tax, which is currently $5.34 million per person).
While there is no right way or wrong way to plan an estate (except not to plan at all), it is clear that Joan Rivers and Lauren Bacall approached their planning differently. Apparently, Bacall preferred to make it simple by giving her estate outright to her children, providing for short-term testamentary trusts for her grandchildren and designating her son to take care of her dog. Rivers preferred to avoid the publicity of probate by establishing a trust, provide for continuing trusts for her daughter and grandchild and a pet trust for her four beloved dogs. Providing for continuing trusts for her daughter and grandson will avoid probate upon their deaths and potentially reduce or avoid estate and generation-skipping taxes as well as provide divorce and asset protection. By providing the pet trust for her dogs, she assures there are funds available for their care and that the care is actually provided.
Our office focuses on all types of estate planning. We can provide plans ranging from the simple to the complex. We work with clients of all ages and income and wealth levels. As a member of the American Academy of Estate Planning Attorneys, our firm is kept up-to-date with information regarding estate planning. You can get more information about scheduling a complimentary estate planning appointment and our planning and administration services by calling the office.