Amidst the overwhelming outpouring of grief at the death of comedian Robin Williams, there is curiosity about what type of estate plan such a beloved, well-known, and wealthy celebrity left behind and how he provided for his children. The recent deaths of other celebrities such as Philip Seymour Hoffman and James Gandolfini show that not all celebs strategize well. Williams, on the other hand, provides an example of careful planning. He might have been known for his rabid comic genius, but his estate plan was no joke.
Although he was hugely successful in movies and television, Williams spoke of financial problems in recent years. Two divorces and fewer movie roles had reportedly depleted his assets to a still-robust $50 million. While it is currently unknown if he left a will, we do know that Williams took steps to protect his children with the creation of trusts. Williams left behind three children, Zach, Cody and Zelda from two different marriages. The terms of the trusts, while private, have been reported in the press as paying out to his children in three lump sums. The trusts are structured so the children each received 1/3 of the value of his or her trust at 21, half of the remaining assets at 25 and the balance at age 30.
Why Trust a Trust Fund?
Trust funds are favored as an estate planning tool because they give you control over your assets. Trusts also keep details about your assets and your beneficiaries private (essential for high-profile people like Williams), whereas wills are court records.
Home Sweet Home Protections
In addition to creating trusts to secure his children’s financial futures, Williams also is known to have created an irrevocable real estate trust, which he named the Domus Dulcis Domus Holding Trust (which translates to Home Sweet Home in Latin). Giving the trust a name with no link to him offered a layer of privacy protection. Both his home in Tiburon and his ranch were placed in the trust and will protect the family from estate taxes on the properties and provide them with important equity in the properties. If these properties were not held in an irrevocable trust, a large portion of the value could be due as estate tax, drastically reducing the family’s holdings.
There are a variety of trusts to consider in your own estate planning and all have their own benefits and restrictions.
AB Trusts as Easy as ABC
An AB living trust is commonly used by married couples. The trust is created by both spouses. When the first spouse (“A”) dies, the surviving spouse (“B”) gets to use the assets during her life, but can’t alter the ultimate beneficiaries for property that was put into the trust by spouse A. When spouse B dies, the trust assets are distributed among the original beneficiaries chosen when the trust was created by A and B. However, spouse B has the flexibility of adding assets to the trust during her life and can control those beneficiaries. This makes an AB trust useful for blended families and allows the creation of children’s subtrusts.
Join Together with Joint Living Trusts
A joint living trust is created by both spouses. Part of the flexibility of this type of trust is that the spouses create the rules themselves for how the assets will be managed and distributed. Each spouse contributes property and controls beneficiaries for his share of joint property and his own individual property in the trust. Both spouses have complete control over all the trust assets and either one can revoke (or shut down) the trust at any time. When the first spouse dies, the surviving spouse gets all the assets in trust for her use and then leaves what remains at her death to her beneficiaries. These trusts are common in community property states because they give the surviving spouse the property’s current value at date of death as the cost basis for the asset (the value against which taxable gains will be measured).
Individual Trusts Keep Things Separate
Not all living trusts have to involve your spouse. Sometimes individual living trusts are useful when there is separate (non-marital property) that you want to pass down to a child or grandchild. These types of trusts work well for unmarried couples. Jointly owned assets are difficult to pass through an individual trust because ownership needs to be separated.
Although Williams is gone, he leaves behind a veritable treasure trove of comedy on film that will be enjoyed for decades to come. Because he so carefully protected his family with well-thought out trusts, his family will continue to benefit from his rare and fleeting talent.
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