CELEBRITIES DISINHERITING THEIR CHILDREN: WHAT CAN WE LEARN?

Which celebrities are disinheriting their children?

Actor Jeff Goldblum recently said on a podcast that he does not plan to leave his children any money when he passes away because he believes his kids should have to “row their own boat”.  Goldblum isn’t the only celeb to express this though. Ashton Kutcher said he isn’t doing a trust for his kids, but is leaving all of his money to charity.  He explained that doesn’t want his kids to be “spoiled and entitled” but rather “motivated to work hard”.  Musicians Sting and Elton John have also been among the rising number of celebrities to say that they don’t plan to leave all of their vast fortunes to their children because it won’t do them any favors.

Is this just celebrities or have you also been seeing this in your law practice?

While the majority of clients still leave their money to their children, not everyone does.  I have worked with clients who left the bulk of their estates to charity as opposed to their children.  There are many parents with significant estates who are concerned about leaving their entire estate to their children, especially in a lump sum payment. The good news is that you can be very creative with the distribution provisions when using trusts, which includes requiring that certain conditions must be met before receiving an inheritance.  Clients can literally incentivize their beneficiaries if they want to receive money from their trusts.

What are some ways to incentivize your beneficiaries?

A couple of celebrities decided to use their trusts to reinforce the importance of education to their children.  Guy Fieri is one of  them.  He was inspired by basketball legend Shaquille O’Neal who said that, “if [my children] want this cheese, they got to get two degrees”.  Like Shaq, Fieri says his kids will have to go to college and post graduate school to receive his fortune.  In our book Trial & Heirs, we share a case from our law practice about a client who wanted to incentivize his grandchildren to have a strong work ethic through his trust.  He was a plumber who built up a multimillion dollar estate and wanted to leave it to his grandchildren, but didn’t want them to be born with silver spoons in their mouths.  We created a trust for him so that every April, the grandchildren show their tax returns to the trustee, and that is the amount of money that they receive from the trust.  This way, their grandfather’s desire for them to have a strong work ethic lives on through his trust.

What advice do you have for parents about leaving inheritances to their children?

It always depends on the parents’ individual family situation and circumstances, but generally it makes sense to spread the money out to your children over time.  This is the case even with adult children.  That way if the children are not responsible with the money initially and lose it, they have another chance (or chances) to be more responsible with their inheritance.  Parents do really need to be realistic with their children’s ability to handle money.  One couple that I worked with realized that their adult children were not good at saving money and were likely not to have any money for their own retirement.  These parents created a trust so that at the age of 65 years old, the inheritance would be annuitized and the adult children would receive the money annually to provide for their retirement.  The clients’ biggest concern was that their children wouldn’t have any money for retirement and if they gave them the money it would be gone right away.  While this is a bit extreme to most people, it accomplished the clients’ goals and is a great example of how you can plan for your children and what is in their best interests.

Are there other advantages to not giving money to your children all at once?

Yes, any money held in a trust is protected from creditors as long as there is a spendthrift provision in the trust, which is usually standard with trusts.  This means that if your child goes through a divorce, or is sued, any money held in the trust cannot be attached by their creditors.  Even the most responsible children can benefit by spreading out an inheritance because it gives them the time to learn how to handle money and protects it from their creditors.

Who can you contact for more information about this?

Individuals definitely want to work with a good estate planning attorney; someone that specializes in this area of the law.  Your attorney should work with you to make sure to reflect your individualized wishes in the documents.  This means that he or she can help you incentivize your beneficiaries through your estate planning.  If you or your loved one live in Michigan or Florida, we can help.  Just email us at contact@danielleandandy.com.

Danielle and Andy Mayoras are co-authors of Trial & Heirs:  Famous Fortune Fights!, legal media experts, and keynote speakers.  You can find them on Instagram, YouTube, and LinkedIn.  For all of the latest legal news, be sure to check out their blog.

 

     

    MEET DANIELLE

    Danielle Mayoras is an on-camera legal expert, attorney, author, and keynote speaker. As a respected media source, she has lent her expertise and analysis to hundreds of media sources, including The Associated Press, Los Angeles Times, ABC News, The Wall Street Journal, Vanity Fair, People, Forbes, Kiplinger, The Washington Post, Huffington Post, among many others. She has appeared on Access Hollywood, the Rachael Ray Show, The Insider, CNN, CNN International, NBC Nightly News, Forbes, The Hallmark Channel, ABC’s Live Well Network, CBS, FOX, PBS, and NBC affiliates. Danielle also serves as a legal analyst for CBS News Detroit.

    In addition to co-authoring the best-selling book Trial & Heirs: Famous Fortune Fights!, Danielle has been a contributor to Forbes and other outlets. Danielle has also appeared as a TV host and legal expert on multiple celebrity documentaries for the REELZ Channel. When not doing media, Danielle helps clients in her thriving law firm and serves as a keynote speaker delighting audiences across the country.