Sunday, February 18, 2007

Anna Nicole Smith's Will = How Not to Plan Your Estate

Anna Nicole Smith was not a stranger to the court system during her short life and it appears that her legal disputes will continue on beyond her early death. Her will, which was filed in a California court, is generating some controversy in the news and legal community under its provisions as drafted. While it isn't even clear what state's (or country's) laws will apply, the will as currently filed specifically inherits any future children or spouses and leaves everything to her now deceased son. This 2001 will apparently was not updated since the tragic death of her son and birth of her daughter. As a result, the circular question now remains: if the sole beneficiary predeceased her, and her infant child (& husband Howard Stern) are specifically disinherited, who is entitled to receive her estate? The first step is going to be to try and find what court the fight should take place. Was she a California resident? Or was she a Bahamian as she had her house and appeared to be living there in the Bahamas.

Some states, such as Iowa, prohibit you from even disinheriting your surviving spouse unless they consent to it. In that situation, her current husband may elect out of the will, if the applicable law applies. Most states do not have a prohibition of disinheriting your children, although disinheriting future unborn children is a little unique and . . . odd. Although a dependent child could be treated differently.

Of course, whatever her estate consists of is also up in the air as the decade long fight with her prior deceased husband's son is continuing in the 9th Federal Circuit Court following the ruling from the US Supreme Court in 2006 which gave her the right to continue with her claims for a share of the fortune in federal court. With a possible half billion at stake, there is certainly an incentive for the fight to continue.

While I can only imagine what was going through the drafting attorney's head when he prepared this will, there are a few lessons to learn from this that we can apply in our situations:

  • Periodically you should review your estate plan, especially if there are significant changes in your life. Birth of a child and/or death of child and/or marriage qualify as "biggies".
  • Use an attorney who understands estate planning and listen to any recommendations they may have for you.
  • Don't get "cute" with your plans. You'll only create confusion and generate work for attorneys.

No comments: