The late Philip Seymour Hoffman was immensely talented and showed off many skills during his career. Unfortunately, estate planning wasn’t one of them. The actor filled out a will but had not updated it since 2004. As a result, two of his three children were left out of it and his longtime partner and mother of his children is now in a difficult spot. Hoffman’s estimated net worth at the time of his drug overdose was $35 million, but there is some concern about where that money will now go.
If Hoffman and his partner Marianne O’Donnell were married, she would be able to inherit the entire estate without any federal or state taxes being applied. The taxes on the inheritance could cost O’Donnell anywhere between $12 and $15 million. While $20 or so million will certainly be sufficient, she and the children would be receiving more money if not for the poor estate planning.
In addition, and perhaps more importantly, there is some question about whether all three of Hoffman’s children will be entitled to the same funds. “The trust referred to in the will only mentions Cooper, not his two younger sisters who were born after the will was signed. It provides that he’ll get half the trust principal when he reaches age 25, and the other half when he turns 30,” notes Deborah L. Jacobs in Forbes. In order to prevent that, the responsibility is now O’Donnell’s.
“He made a mess,” said David Mendels of Creative Financial Concepts, a New York-based financial planning firm.
Not only did Hoffman fail to update his will for a decade, but some believe that he hired the wrong attorneys when he first wrote his will. “The estate plan itself is also problematic, experts say — perhaps because the lawyer who drew it up appears to specialize in real estate rather than trusts and estates,” writes Kelley Holland.
Regardless of who is at fault –- Hoffman or his attorneys –- the issue was likely preventable.
“Most people think their estate planning needs are simple. However, due to the complexity of the legal system, there are numerous issues that comprehensive estate planning should address,” explains Carrie Quraishi, an estate planning attorney with Quraishi Law. Some attorneys only “dabble” in estate planning which can be ineffective and even dangerous. A qualified attorney that focuses on estate planning can help you navigate through these issues and help ensure that you have an effective and proper plan that will protect your loved ones.”
The biggest thing to learn from Hoffman’s mistakes is that wills and estate plans need to be updated. “The fact is that the biggest blunder he made was not updating his estate,” said Richard Shapiro, a trust and estates lawyer. “I would not be surprised if his dispositive wishes had changed. You never want to go 10 years without doing planning.”