Subscribe!

Estate Planning Lessons We Can Learn from Three Famous Moms

Written by: Carrell Blanton Ferris

Posted on: May 10, 2024

Gloria Vanderbilt: No Trust Fund Kids for Her

We are at the precipice of what is being called “The Greatest Wealth Transfer in History,” as baby boomers are set to pass down $84 trillion to younger generations.[1] Every parent wants to see their children succeed. But some may wonder whether an inheritance will help promote or hinder the future success of their children. Famous mom Gloria Vanderbilt was staunchly against trust funds for her kids. And at least one of them applauds her decision.

Vanderbilt Heiress Makes Good on “No Trust Fund” Promise

Before she passed away in 2019, Gloria Vanderbilt, heiress to the Vanderbilt fortune (or at least what remained of it) that was created by her great-great-grandfather, railroad and shipping tycoon Cornelius Vanderbilt, made it clear to her three children that they should not expect a trust fund from her.

Gloria was herself the beneficiary of a trust fund worth an estimated $2.5–$5 million in 1925, or around $35–$70 million today, and had a reported net worth of around $200 million when she passed away.

But unlike her father, Reginald Vanderbilt, who squandered most of the family fortune, Gloria made more money than she inherited during her career as a fashion designer, actress, model, and artist, building a denim business that was worth an estimated $100 million.

In a 1985 interview with the New York Times, Gloria said, “I’m not knocking inherited money, but the money I’ve made has a reality to me that inherited money doesn’t have.”[2]

Decades later her son, CNN news anchor Anderson Cooper, echoed his mother’s stance on inherited wealth when he called it a “curse” and an “initiative sucker” and questioned whether he would have been so motivated if he felt like there was a “pot of gold waiting for [him].”[3]

“We believe in working,” he told radio host Howard Stern when Stern argued that leaving your children an inheritance is a loving gesture.[4]

Like his mother, Cooper did just fine on his own. Although he ended up receiving $1.5 million from Gloria’s estate, his net worth prior to his inheritance was thought to be more than $100 million—hardly the mark of a trust fund kid.

The Case for and against Leaving Your Kids an Inheritance

It is becoming something of a trend among the super-rich to not leave their fortunes to their kids. Mick Jagger recently revealed that he will be leaving his $500 million fortune to charity rather than to his eight children, joining the ranks of mega wealthy celebs and business people like Warren Buffet, Mark Zuckerberg, and Bill Gates who have made similar vows.

Others, including famous foodie Guy Fieri, actor Jackie Chan, and composer Andrew Lloyd Webber, want their kids to work for their inheritances. Fieri’s recipe for his children’s success?  The children are not allowed to take over his dining empire until they achieve postgraduate degrees.

Research suggests there is wisdom to avoiding the silver spoon scenario. The Williams Group wealth consultancy, for example, found that 70 percent of wealthy families lose their wealth by the second generation, and 90 percent lose it by the third generation.[5] A survey by U.S. Trust found that only 42 percent of high-net-worth individuals have a high degree of confidence that the next generation is financially responsible enough to handle an inheritance.[6]

The Vanderbilts present a compelling case study—and counterpoint—to the narrative of heirs wasting the family fortune. Despite receiving a trust from her profligate father with enough funds to live comfortably, Gloria’s inheritance did not dull her desire to achieve independent success. Cooper also had a strong work ethic. He went to Yale, interned at the CIA, and became one of the most recognizable faces in the media.

It could be that Gloria, like every mother, knew her child best and knew he would succeed on his own. Perhaps equally as important was the good example she set for her children.

One of the main reasons why family fortunes are squandered is because those who create the initial wealth do not pass on detailed instructions or restrictions regarding how heirs should spend it. Attitudes towards wealth, like wealth itself, are often inherited. Kids need to learn good foundational money habits to be financially successful. And estate planning tools like trusts that specify how and when the money can be used offer an enforcement mechanism.

Having a trust fund or substantial inheritance does not guarantee that heirs will be successful in life. Conversely, not leaving an inheritance could be a strong motivator for loved ones to find their own path forward.

What is good for one kid may not be necessarily good for every kid. While some make the most of their inheritance with no strings attached, others benefit from safeguards and incentives.

Another option you have as a parent is to gift money to your children now, when it might benefit them more and you can keep an eye on how they spend it. For 2024, you can give gifts of up to $18,000 per recipient to as many people as you want without having to pay any taxes on the gifts. Also, gifts over $18,000 per recipient will not necessarily result in a gift tax but will instead chip away at your lifetime gift tax exclusion amount of $13.61 million. These threshold amounts double for couples.

Intergenerational wealth-building and estate planning go hand in hand. For help crafting a plan that puts your heirs in the best position to succeed, reach out to our attorneys and schedule a meeting.

[1] Jennifer Wines, How Might the Great Wealth Transfer Change Society?, Kiplinger (Dec. 5, 2023), https://www.kiplinger.com/retirement/how-might-the-great-wealth-transfer-change-society.

[2] Antoinette Bueno, Why Gloria Vanderbilt Did Not Leave an Inheritance for Son Anderson Cooper, ET (June 18, 2019), https://www.etonline.com/why-gloria-vanderbilt-did-not-leave-an-inheritance-for-son-anderson-cooper-127225.

[3] Michelle Singeltary, Gloria Vanderbilt Reportedly Did Not Leave Her Heirs Much Money. Maybe You Should Follow Her Lead., Wash. Post (June 24, 2019), https://www.washingtonpost.com/business/2019/06/24/gloria-vanderbilt-is-reportedly-not-leaving-her-heirs-much-money-maybe-you-shouldnt-either.

[4] Id.

[5] ​​See ​​Rhymer Rigby, Disinheriting Your Children Might Be for Their Own Good, Fin. Times (Oct. 14, 2019), https://www.ft.com/content/eb4a390a-d926-11e9-9c26-419d783e10e8.

[6] U.S. Trust, U.S. Trust Insights on Wealth and Worth: The Generational Collide 14 (2017), https://www.truevaluemetrics.org/DBpdfs/ImpactInvesting/UST-BoA-Wealth-Worth-Overview-Broch-2017.pdf.

_______________________________________

Aretha Franklin: Too Much Estate Planning

Too little estate planning can put your heirs in a bind and tie up your estate in time-consuming and costly probate litigation. But as the legal saga of Aretha Franklin’s estate shows, too much estate planning—in particular, planning that introduces uncertainty about your final wishes—can also be problematic.

After her death, there are lessons to learn from the Queen of Soul about how to R-E-S-P-E-C-T your legacy—and your heirs—with a well-thought-out, professionally prepared estate plan.

Four Sons, Two Wills, and One High-Stakes Court Drama

Aretha Franklin, one of the most influential and successful singers in American history, passed away at her Detroit, Michigan home in 2018 at the age of 76. Her passing marked the end of a storied musical career—and the beginning of a five-year court battle among her children over her last will and testament.

Initially, it appeared as though Franklin died intestate—that is, without a will—which would have left the court to decide how her personal property, real estate, music and copyrights, and other money and property would be divided among her four sons. But the surprise discovery of not one but two wills raised legal questions about how Franklin wanted her money and property distributed.

One will from 2014 was found under couch cushions and written in a spiral notebook. The other, dated 2010, was in a locked cabinet. Both were handwritten and had detailed lists of her accounts and property and named who should get what, but neither was prepared by a lawyer or listed witnesses. Further complicating matters, the two wills contained key differences about how the estate should be divided up, and Franklin’s sons disagreed about which version should control the estate.

Over the next five years, the sons would face off in court over these tangled legal questions. The case became combative, and a rift reportedly developed in the family. A jury finally put the saga to rest when it determined that the 2014 document found in the late singer’s couch represented her true final wishes.

Takeaways from Franklin’s Will Dispute

Estate planning is about cementing your legacy as you envision it and making sure that your heirs have minimal burdens when they inherit your money and property.

Aretha Franklin’s legacy, at least from a musical standpoint, cannot be questioned. But her failure to put her personal finances in order before her death led to a messy legal situation that could have been easily avoided with the following basic estate planning strategies:

  • Let loved ones know where documents are stored. A will must be presented to the court and verified before it takes effect. If it cannot be found, it is effectively useless. You need to make sure that your loved ones know where your will is stored, along with your additional estate plan documents like trusts, powers of attorney, and life insurance policies. Keep them some place secure, such as a bank safe deposit box, a fireproof safe, a filing cabinet, or an encrypted online cloud. Anyone needing access to the documents should also have access codes. Document copies can be given to your estate planning attorney, the local probate court, a trusted friend or family member, or the executor as a fail-safe.
  • Keep just one version of estate planning documents. Only one will is admissible to probate. As it did in Franklin’s case, the most recent version of a will or other estate planning document typically prevails in court over an older one. If you update your will or create new documents, destroy the older version to prevent confusion.
  • Avoid handwritten wills. Unless you find yourself on your deathbed without a will, desperately scrawling one out at the last minute, there is not really a good reason to use a handwritten will, known as a holographic will. Although holographic wills are considered legally valid in many states, there are some states that do not allow them at all, and in the states that do allow them, they must meet certain criteria. In some states, for example, the material issues (what you have and to whom you want to leave what you have) must be in your own handwriting and signed and dated by you. Working with an attorney is a much better way to ensure that the document is legally prepared and executed.
  • Do not send mixed messages. Having more than one will is an estate planning blunder that is easily avoided. But you will also need to make sure that your wishes are properly reflected in the beneficiary designations on your retirement accounts and in the way you have created jointly owned accounts and property.
Estate Planning Is a Lifelong Process

An estate plan is not something you complete once and then leave in a cabinet (or under couch cushions). It needs to be revisited and updated throughout your life as things change. The earlier you start estate planning, and the more vigilant you are about revising it, the better. Ignoring it or waiting until the last minute to make revisions could have unintended consequences that your heirs are left to deal with.

To complete or review your estate plan, please reach out to schedule a meeting with our attorneys.

_______________________________________

Lucille Ball: Dangers of Being the First to Die

Lucille Ball was the queen of television comedy to an older generation of Americans. Today, more than 70 years after I Love Lucy premiered, reruns still air on late-night networks, making it the longest-broadcasted TV show of all time and endearing Ball to a new generation of fans.

Rankings of the best I Love Lucy episodes can be found across the web. There are also real-life lessons to learn from Ball, including from a lesser-known episode involving her daughter and her widower’s second wife that provides important estate planning lessons about remarriage.

How Some of Lucille Ball’s Prized Possessions Ended Up at Auction

Ball had two children with her first husband, actor Desi Arnaz: Lucie Arnaz and Desi Arnaz Jr. The beneficiaries of the Lucille Ball Estate, estimated at $40 million when she died in 1989, were her two children and her second husband, Gary Morton.[1]

But it is what Lucy’s daughter Lucie did not end up inheriting that sparked a fierce legal battle between her and Susie McAllister, whom Gary Morton later married after Lucy’s death.

Morton died in 1999, and in 2010, more than 10 years after Morton’s death, McAllister consigned several items to Heritage Auction Galleries, including love letters between Ball and Morton, photos of the couple, a Rolls Royce, and some of Ball’s personal items like an address book, backgammon boards, and lifetime achievement awards.[2]

When Lucie learned about the auction, she demanded some of the items be returned, threatening legal action against McAllister to stop the sale. According to a countersuit filed by McAllister against Lucie seeking a judge’s ruling to let the auction proceed, Ball left the personal effects in question to Lucie in her estate plan—but Lucie never claimed them from the estate. They then passed to Morton and eventually to McAllister from her late husband.

The judge ultimately ruled in favor of Lucie and said that the auction could be stopped if she posted a $250,000 bond, but Lucie unfortunately could not afford it. Not all was lost, though, as her legal team reached an agreement with the auction house to have the lifetime achievement awards returned. The other items were auctioned off.[3]

Estate Planning Lessons from the Ball Auction Debacle

An attorney representing Lucie had strong words about the auction, saying it was insulting to Ball’s legacy and contravened her “express desire that these items were to belong to her daughter after her death.”[4]

One of the stranger and unexplained aspects of the Lucille Ball auction saga is why Lucie would have forfeited the items that ended up being offered for sale. While McAllister contends they were never collected, both women agreed that Ball left them to her daughter in her will.

Assuming this is true, it means that Lucie made a mistake by not claiming the property she was gifted. Typically, unclaimed inheritances pass to the next beneficiary in line—presumably in this case Gary Morton.

However, in leaving the unclaimed heirlooms to McAllister, Morton may also have erred. It is plausible he did not know that Ball wanted Lucie to inherit the personal effects. But he probably should have known that they were better off with his stepdaughter than with McAllister, to whom they could not possibly have had any sentimental value. Put yourself in McAllister’s position: she lived with reminders of the couple’s life together for more than ten years out of respect for them and finally parted with the items as she remodeled her house and sought a fresh start.

The entire situation between McAllister and Lucie might have been avoided if Morton had asked himself why McAllister would want the old love letters, photos, and awards. So the second lesson that can be learned from this legal drama is that if you inherit property from a previous spouse and later remarry, you need to think carefully about who should inherit it.

Fitting the Small Details into the Big Picture of Your Estate Plan

Whether you are on the giving or the receiving end of an estate plan, we have your needs covered.

If you were named as an estate beneficiary and are not sure how to claim the accounts or property gifted to you or need to take action to protect your beneficiary rights, our estate administration attorneys can help. We can also assist with the often complicated estate planning decisions that come with remarriage and blended families.

Thoughtful, proactive action is the key to successful estate planning. To discuss your estate plan goals and concerns, schedule a meeting with our attorneys.

[1] Neetha K, Lucille Ball: Life, Death & Money: What Was “I Love Lucy” Star’s Net Worth at the Time of Her Death?, Meaww (Jan. 9, 2021),  https://meaww.com/lucille-ball-life-death-money-i-love-lucy-star-net-worth-at-death-reelz-documentary-estate-heirs-war.

[2] Lucille Ball Memorabilia from the Estate of Gary Morton—Including Love Letters, Rolls Royce, Awards and Artwork—at Auction in Beverly Hills, Heritage Auctions (July 6, 2010), https://news.cision.com/heritage-auctions/r/lucille-ball-memorabilia-from-the-estate-of-gary-morton—including-love-letters–rolls-royce–awards-and-artwork—at-auction-in-beverly-hills,g502294.

[3] Jason Pham, Here’s Where Lucille Ball’s Kids Are Now & How Much They Inherited after Their Mom’s Death, Yahoo! Fin. (Mar. 7, 2022), https://finance.yahoo.com/news/where-lucille-ball-kids-now-133309434.html.

[4] Catherine Saunders-Watson, Heirs Spar over Upcoming Auction of Lucille Ball Items, LiveAuctioneers (July 15, 2010), https://www.liveauctioneers.com/news/top-news/crime-and-litigation/heirs-spar-over-auction-of-lucille-ball-items.

Blog Content Provided by WealthCounsel – BAW reviewed and edited 5.10.2024

Print Friendly, PDF & Email