Celebrity Estate Planning Mistakes

Whitney Houston

Mistake: Not updating the will. Songstress Whitney Houston had a will when she drowned in February 2012, but it was quite outdated. Drawn up a month before the 1993 birth of Houston's only child, daughter Bobbi Kristina Brown, the will was never revised — not even as the singer's fortune climbed to $20 million. Bobbi Kristina was 18 when her mother died, and under the will's terms was to receive 10 percent of the estate — $2 million — when she turned 21 and the rest later. By not updating her will, Houston failed to consider whether her daughter was mature enough to handle millions of dollars, Mayoras says. Even "$50,000 all at once to a 21-year-old could be too much," he says. Bobbi Kristina got the $2 million but not the rest of her inheritance. She died in 2015, also as a result of drowning and drug intoxication.

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James Gandolfini

Mistake: Not finishing planning. Sopranos actor James Gandolfini was reportedly worth $70 million when he died in June 2013 of a heart attack in Rome. His will provided for his widow, daughter and two sisters (his son from his first marriage was provided for in other ways). But Gandolfini didn't use proper tax planning. The result: The estate ended up paying federal and state estate taxes at a hefty rate of 55 percent. Gandolfini made a will before leaving on vacation but did no planning beyond that, Mayoras says. "For many people, not just celebrities, a simple will isn't enough," he says. "There are a lot of estate taxes that could've been avoided if he'd done better estate planning, including creating a trust."

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Marlon Brando

Mistake: Making oral promises. Actor Marlon Brando had an estate plan for his $100 million fortune when he died in July 2004. Problem was, his written plan excluded certain oral promises he allegedly made to his long-term housekeeper, Angela Borlaza. She filed two lawsuits claiming she was illegally kicked out of Brando's California home. The former maid said the house was a gift to her from Brando. The actor, though, never completed the paperwork to transfer the deed to give Borlaza legal ownership. In court, she sought $627,000 — the market value of the house — plus $2 million in punitive damages. The case settled for $125,000.

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Michael Jackson

Mistake: Failure to fund a trust. Superstar Michael Jackson's death in June 2009 touched off a string of ongoing court battles over his estate, now worth $600 million. One of Jackson's biggest estate planning missteps was creating a trust — and then failing to fund it. Absent a properly funded trust, Jackson's beneficiaries have wound up numerous times in probate court, the estate is still open, and all things concerning it are subject to court approval. "Probate court is public, more expensive, time-consuming and more prone to fighting," Mayoras says.

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Heath Ledger

Mistake: Inadvertently omitting a child. After actor Heath Ledger died in January 2008, reports surfaced that he had failed to update an old will created before his daughter was born. As a result, Ledger's entire $20 million estate went to his parents and three sisters. "A will should always have language that references any of your natural born children, adopted or stepchildren, and any offspring you may have in the future," says Stephanie Genkin, a certified financial planner in Brooklyn. Fortunately, relatives revealed in late 2008 that all of Ledger's money would go where he would have wanted — to daughter Matilda Ledger, whose mom is actress Michelle Williams.

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Philip Seymour Hoffman

Mistake: Failing to use trusts wisely. Academy Award–winner Philip Seymour Hoffman was determined not to let his children turn into spoiled "trust-fund kids," so he chose not to create a trust. When he died in 2014, his entire $35 million estate went to the mother of his three children, Marianne O'Donnell. That might not have been so bad, except that Hoffman's decision meant his beneficiaries also inherited a whopper of an estate tax bill. Hoffman erred in thinking that trusts would automatically create entitled or lazy trust-fund kids, Mayoras says. Trusts can be customized, and Hoffman could have made specific stipulations about when, how and under what circumstances his kids inherited money — including a provision that the children work.

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Florence Griffith Joyner

Mistake: Keeping a will's location secret. Olympic gold medalist Florence Griffith Joyner had a will when she died in September 1998. The problem: No one knew where "Flo Jo" kept it. It threw her relatives into an estate planning battle because they couldn't find her original will. And without the will, it took four long years to close her probate estate.