Chances are you’ve probably heard late musician Lou Reed song urging listeners to, “take a walk on the wild side”, but you probably didn’t know that the singer and guitarist died having an estate worth over $30 million. Now, thanks to a pair of writers who chronicle the fortunes of the rich and famous, many of us can learn from Lou Reed’s mistakes regarding estate planning.
According to the authors of “Trial & Heirs: Famous Fortune Fights,” the former member of The Velvet Underground created a will about a year and a half prior to his death from liver disease on October 27, 2013. The authors claim that while a will is okay for some people, a person with a sizable fortune such as Reed would have been wiser to have selected a revocable trust. The key difference between the two forms of estate planning is that information contained within a will can be made public whereas a revocable trust is administered by private parties and thus it remains confidential.
An additional benefit to the revocable trust versus the will is that the trust can assist the person creating it should they become incapacitated while they are still alive. The will can only become enforceable upon death.
Recently, in the Surrogate’s Court in Manhattan, New York, Reed’s longtime friend and manager filed documents with the court, which showed the late musician’s estate earned more than $20 million since the man died at the age of 71. According to the authors, another liability of creating a will rather than a revocable trust is that any challenges or other probate litigation can quickly become expensive because those disputes are handled in the Surrogate’s Court rather than by estate trustees.
There are many reasons why a person should establish a solid estate plan prior to their death. Perhaps the best reason is that a well-considered estate plan greatly eases the distribution of property and assets after a person dies. Probate litigation such as defending a contest to a will by potential heirs and unraveling issues related to the formation of a trust can easily be avoided with proper planning.
Source: Forbes, “Lou Reed Walked On The Wild Side With His Estate Planning” Danielle and Andrew Mayoras, Jul. 10, 2014