Whitney Houston’s Will has been big news since it was recently filed with the probate court in Fulton County, Georgia. Perhaps the biggest news is that Ms. Houston’s estate plan consists of a Will, signed in 1993 and modified by a single codicil, and nothing more. Not even a living trust.

The Will names Ms. Houston’s daughter, Bobbi Kristina, as sole beneficiary, with a provision for her estate to be distributed via a testamentary trust.

The fact that Whitney Houston left behind such an underwhelming estate plan creates some great talking points for you and your clients. Here are three:

Living Trusts Have Advantages: We’re all well acquainted with the benefits of living trusts, but our clients aren’t so familiar with them.

Here’s a thought: If Ms. Houston had opted for a living trust rather than a will, her estate plan would not be available for public viewing via Inside Edition or other curiosity-seekers. Most of your clients won’t have to worry about their Wills appearing on all the gossip websites, but they might be concerned about extended family members, colleagues, or acquaintances snooping through their private business.

Depending on the probate process in your state, the fees and delays associated with probating a Will may also be a concern. In addition, living trusts can serve as a valuable tool for balancing the varying needs and interests of blended families. You should counsel your clients to take all of these factors into account when thinking about an estate plan.

It Pays to Understand the Law: Whitney Houston made her Will in 1993, when she was married to Bobby Brown and was a resident of New Jersey. Had she and Brown still been married at the time of her death, he would have had the right to an elective share of her estate, regardless of the terms of her Will. That is, unless he’d signed a waiver of his right to an elective share. Who knows whether Whitney Houston understood that New Jersey law trumped the terms of her Will? Your job is to ensure your clients make educated choices about their own estates.

Update, Update, Update: Regardless of the estate planning method your clients ultimately use, it’s imperative that they update their estate plans. A lot transpired in the 19 years between the making of Whitney Houston’s Will and her death. She signed a codicil in 2000 naming her mother as executor, but she didn’t make any changes to her plan after her 2007 divorce.

Again, this is a great discussion point for your clients. Your clients may or may not know that a divorce creates the need for a new Will or trust. But they’re likely unaware that a divorce decree doesn’t automatically sever all ties – think beneficiary designations, for example. It’s your role to counsel and educate them – not only about updating after a divorce, but after other life changes, too.

The Whitney Houston estate – or any other celebrity estate – can present a great jumping-off point for a discussion about your clients’ needs. It can be a great way for you to connect with your client on a personal level, while giving a teaching moment, as well.

Stephen C. Hartnett, J.D., LL.M.
Associate Director of Education
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (858) 453-2128
www.aaepa.com

“Singular.” In almost every article chronicling Whitney Houston’s sudden death, that’s the word being used to describe her talent. And it couldn’t be a more accurate choice.

While Whitney Houston’s talent was singular, it looks like the value of her estate will follow a pretty common pattern. In the hours and days after her death, sales of her singles and albums skyrocketed. She’s joining the throngs of artists who came before her whose earnings continued – and substantially increased – after their deaths.

According to Forbes magazine, the estates of each of 2011’s five “top earning dead celebrities” grew by many millions of dollars last year. Three of the five have been dead for decades, and have estates that continue to earn significantly year after year.

1. Michael Jackson, who died in 2009, took in $170 million last year.

2. The King of Rock n’ Roll, Elvis Presley, deceased since 1977, made $55 million.

3. Marilyn Monroe, who died in 1962, made $27 million in 2011. According to Forbes, Authentic Brands Group bought the rights to Monroe’s estate last year. The company has used her image in an ad for J’Adore fragrance with Charlize Theron and is planning to launch Marilyn Monroe cafés.

4. Peanuts cartoonist Charles Schultz brought in $25 million last year. His estate stands to earn more in future years as his characters move into the digital space.

5. The estate of John Lennon, who was killed in 1980, made $12 million in 2011.

How is all this information relevant to you and your clients? If you have a client who is a singer, an actor, a writer, or otherwise involved in the arts, counsel them on the importance of planning for the distribution of their interests in royalties. Make sure your client understands how dramatically the values of those royalties can change over the years – even after they’re gone.

In other words, what if the client sitting in your office is the next Vincent Van Gogh? What is worth $100 today might be worth millions tomorrow. So, if they want child number one to get the house and child number two to get the rights to their art, the end result could be a very unequal distribution of the estate.

When you help your client think through the range of possible outcomes, you open the door for a more balanced estate plan that better reflects their true wishes.

Stephen C. Hartnett, J.D., LL.M.
Associate Director of Education
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (858) 453-2128
www.aaepa.com