Feb 19, 2014

Philip Seymour Hoffman's will goes public

What a loss. Philip Seymour Hoffman, the amazingly talented Oscar-winning actor, died of an apparent heroin overdose on February 2. He had accumulated considerable wealth, with an estate rumored at $35 million. He was father to three young children. And according to reports, Hoffman anticipated his life might be cut short by the longtime drug addiction he battled, not fully successfully.

Hoffman's will went public this week when it was filed in New York surrogate court. His estate plan reveals something of his values and personality, requesting that his son - the only one of his three children born when the will was drafted in 2004 - be raised in Manhattan, or if not possible, in Chicago or San Francisco. "It is my strong desire that my son, Cooper Hoffman, be raised and reside in or near the borough of Manhattan... so that my son will be exposed to the culture, arts and architecture that such cities offer," the will states.

From a legal point of view, Hoffman's estate plan is somewhat confounding. He never revised his will in the ten years during which his two other children were born. His will does not reference his "children," instead referencing by name just his one son, Cooper. Although estate laws in New York will undoubtedly protect the two daughters born since the signing of the will, that is going to add additional complexity, delays and cost to the probate process. I always urge clients to revisit their estate plan whenever any significant life event occurs. Death, illness, a change in financial fortune - certainly a birth - fall into that category. 

Hoffman left most of his estate to Mimi O'Donnell, the mother of his three children. They were not married, so federal estate taxes will significantly erode what the family gets. Since Hoffman was a resident of New York, which unlike Florida has its own estate tax, Hoffman's estate will also pay out a hefty chunk of change to the state.

The other question that begs to be asked is this: Why would someone with such a public profile rely on a will as the crux of his estate plan? The probate process is a public one. Had Hoffman been my client, I would have steered him away from that approach, and suggest he use a revocable trust in order to protect his family's privacy. Moreover, probate can tie up an estate for some time. It is said that O'Donnell has requested that the will be probated in an expedited fashion, which could signal that the family cannot wait and needs the cash now.

We also now know that Hoffman's will establishes a trust with his son as the beneficiary, to pay for his son's "education, support, health and maintenance." Hoffman directed that half be distributed to his son at age 25, and the remainder at age 30. There's no question that this is preferable to releasing all the money when a beneficiary attains the age of legal majority. Still, as readers of my blog know, my experience has been that many of today's youngsters are far slower to mature than the prior generation was, at least as far as money management is concerned. Not every child becomes financially savvy at 25, or even 30. Had I been advising Hoffman, I would have suggested that he consider putting more thoughtful strings on the timing and method of distributing the funds Cooper will receive, which will probably amount to the millions.

Moviegoers and theater-lovers will surely miss Hoffman. Estate planning aside, he leaves behind an extraordinary artistic legacy.

No comments:

Related Posts Plugin for WordPress, Blogger...