Earlier this year, following the passing of Anthony Bourdain and Kate Spade, I examined certain estate planning lessons to be learned from celebrity deaths. In that article, I discussed how music artists, Bob Marley, Prince and Jimi Hendrix failed to do any estate planning prior to their deaths, while other celebrities such as Paul Walker and Muhammad Ali did, in one way or another, take care of their estate planning prior to their deaths. In a separate article, I looked at how singer, Aretha Franklin, also failed to draft a will prior to her death, leaving her family to battle it out in court for control of her estate.
Another recent celebrity death has compelled us to revisit this topic.
On September 7, 2018, a close, personal friend of mine, 26-year old music artist and producer, Malcom McCormick (aka “Mac Miller”), passed away from an accidental drug overdose at his home in California. However, five years prior to his untimely passing, in 2013, Mr. McCormick simultaneously created a will and executed a living trust agreement.
In his will, which is a publicly accessible document in the State of California, where it was executed, Mr. McCormick left his entire estate to his trust and named himself as the initial trustee. This means that all of his assets and property would be owned and controlled by the trust in accordance with the provisions of the trust documents.
Unlike wills, revocable trusts are not a matter of public record. This makes trusts a beneficial estate planning tool
Likewise, estates placed in the control of a trust are not required to pass through the court system, which is often a very stressful and expensive process here in Florida, as well as California. Because of this, it is unknown who all was named as a beneficiary of his trust or any other exact details of how Mr. McCormick wanted his estate controlled or devised. We do know, however, that Mr. McCormick, in his will, named his parents and older brother as successor trustees, in that order, thereby giving them the authority to take actions on behalf of the trust based on his proscribed wishes.
Another important takeaway is that in order to ensure an estate stays out of probate court after the trust grantor’s passing, the funding of the trust must be completed during the trust grantor’s lifetime. For Mr. McCormick, this involved re-titling his assets, such as his house, bank accounts, or investment accounts from Malcolm McCormick, the individual, to the Malcolm McCormick Revocable Living Trust, during his lifetime.
If a grantor, or a separately authorized trustee, were to fail to re-title the grantor’s assets into the name of the trust prior to the grantor’s death, there is a saving grace – the execution of a “pour over” will, such as the one used by Mr. McCormick. That’s right, the will we discussed above – that states all of Mr. McCormick’s assets were to be left to his trust – also serves as a pour-over will. In essence, a “pour-over” will is a catch-all in case Mr. McCormick forgot to retitle or transfer any of his assets to his trust during his lifetime. This ensures that all of his assets would pour over into his trust after his death and not have to pass through probate, easing the burden on his family during an already difficult time.
The use of a pour-over will along with a revocable trust is a very smart and well-advised estate planning technique for those who want to keep their assets, estate information, and potential beneficiaries’ identities private, both during the grantor’s lifetime and after death.
Mac Miller had a plan. All millennials should, too.
In fact, Mr. McCormick’s plan mirrors that of uber-celebrity, Michael Jackson, who also used a pour-over will along with a revocable trust agreement in his estate plan. Like Mr. Jackson’s estate, no one will ever really know the extent of Mr. McCormick’s assets because everything poured into his private trust.
All the more impressive, Mr. McCormick passed at a young age and without children or a spouse, yet he had the smarts and foresight to put together this comprehensive estate plan. In today’s world, it is a common misconception that estate planning is not important for young people without children. In fact, most young people dismiss the necessity of an estate plan, and continue to put it off well into adulthood, often times until it is too late. In another previous article, we discuss why estate planning is still important even if you do not yet have children.
All told, while we mourn the loss of celebrities, both known to us personally, or from afar, there is a lot to be learned – both what to do and what not to do – following death.
If you are interested in learning more about the estate planning documents and techniques discussed in this article, please contact me today. I do not just draft documents; I ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That is why I offer a Family Wealth Planning Session™, during which you will get more financially organized than you have ever been before, and make all the best choices for the people you love.