WHITNEY HOUSTON’S WILL: WHITNEY HOUSTON’S FAMILY DOESN’T TRUST BOBBI KRISTINA’S ABILITY TO HANDLE MONEY
Whitney Houston’s mother, Cissy Houston, and sister-in-law, Marion Houston, filed a request in court to change the terms of Whitney Houston’s will. They want to delay when Bobbi Kristina receives her inheritance in order to protect her.
The will created a “testamentary trust” for Bobbi Kristina. What is a testamentary trust? It’s when a will calls for money to be held in trust for one or more beneficiaries, usually so they can receive money spaced out over time instead of all at once. It’s far from perfect, as we discuss in this article, because a testamentary trust does not avoid probate, which can be expensive, messy and very public.
But that is not the biggest drawback to Whitney Houston’s will. Her biggest mistake was failing to update her will, even after her divorce from Bobby Brown, to better protect Bobbi Kristina. The will — signed on February 3, 1993 — provides that Bobbi Kristina will receive 10% of the estate when she turns age 21, another one-sixth at age 25, and the full balance at age 30. Bobbi Kristina is the only heir, so whatever royalties and other assets the estate now has or will earn in the future pass on to her.
Clearly, Cissy and Marion don’t believe she can handle it. They recently filed a “Petition to Reform Testamentary Trust” claiming that the distributions to Bobbi Kristina “would likely directly conflict with and cause the opposite of [Whitney’s] intent to provide long-term financial security and protection for her child”. The Petition points out that the trust will have valuable assets — estimated by some to be worth at least $20 million. Of course, the actual worth will depend on future sales.
Cissy and Marion allege that Bobbi Kristina, who is now 19, is a “highly visible target for those who would exert undue influence over her inheritance and/or seek to benefit from [Bobbi Kristina’s] resources and celebrity.” They feel that Whitney couldn’t have known this when she signed the will back in 1993, and her true intent would be to make sure that Bobbi Kristina’s long-term maintenance and care were protected, as well as that of Bobbi Kristina’s future children.
While these concerns surely have some degree of merit, given that the will only calls for relatively smaller pay-outs in the next several years (10% at age 21 and one-sixth at age 25), it appears that Cissy and Marion are worried that Bobbi Kristina won’t be able to protect herself and this money even after she receives the bulk of it at age 30. All celebrities with wealth are potential targets for unsavory types. So, Whitney’s family members clearly do not trust that Bobbi Kristina can protect herself when she begins receiving money.
It is not clear how much protection Cissy and Marion feel she needs, because their Petition does not ask for a specific change to the trust. Instead, they ask the court to change the distributions in a manner consistent with what Whitney would have wanted.
This is a great example of why everyone needs to update their wills and trust documents periodically. As the Petition points out, Whitney’s financial and family circumstances in 1993 were far different from when she passed away earlier this year. Whitney should have updated her documents to address these changes in the 20-years since she signed her will.
In fact, Whitney did sign one “codicil” (which is an amendment) to the will in April, 2000, but it only changed who would act as trustees, not the distribution schedule. One has to wonder why she did not ever address when the money would be distributed, if her intent did change.
There is no guarantee that this Petition will work. Whitney had almost 20 years to change the will if her intent changed and she easily could have changed the distribution schedule when she signed the codicil in 2000. If her intent was to protect Bobbi Kristina beyond age 30, as Cissy and Marion believe, then Whitney should not have left it to chance.
That’s why periodically reviewing your documents with an experienced estate planning attorney is so important. Don’t leave the future of your loved ones up to chance.
10/29/12 update — TMZ is reporting that the Trustees have withdrawn their Petition and backed off from their requests that the Trust pay-outs be delayed.
Danielle and Andy Mayoras are co-authors of Trial & Heirs: Famous Fortune Fights!, television hosts and keynote speakers. You can find them on Facebook, Twitter, Instagram, YouTube, and LinkedIn. For all the latest celebrity legal news, be sure to check out their blog.
[Photo credit: Wikipedia]