The tragedy of Philip Seymour Hoffman’s death by an apparent drug overdose is compounded by the estate planning mess he left his partner of many years, Mimi O’Donnell, and their three children. The publicity and estate taxes his plan will cause mirror those of James Gandolfini’s, about which I commented on in a previous post. Both movie stars used wills rather than trusts, which means that their plans and the contents of their estates are in the public records. Both were not married to their partners and the mothers of their children, which will result in large estate taxes having to be paid.
Mr. Hoffman’s estate is estimated to be worth $35 million and could be subjected to New York and federal estate taxes totaling as much as $15 million. He executed his will almost 10 years before his death, creating a trust for his son, Cooper, but making no provisions for his two daughters who were born later. Fortunately, the will leaves everything else to Ms. O’Donnell who can certainly correct this inequity through her own estate planning. But there’s nothing to make sure that the estate stays in the family if Ms. O’Donnell marries someone else in the future.
The will also makes no provision for Mr. Hoffman’s mother or brother, with whom he was apparently quite close, or any of the non-profit theaters with which he worked.
If Mr. Hoffman had used trusts instead of a will, we would not know what we already know about his estate and would not have the opportunity to look at his estate assets when they are listed at the New York Surrogates Court. While the estate tax is somewhat difficult to avoid in the absence of marriage, the use of lifetime gifts, life insurance (if Mr. Hoffman was insurable, given his difficulties with drugs), and trusts could have mitigated the tax effect. It could also reduce the tax to be paid at Ms. O’Donnell’s death.
Mr. Hoffman appears to have followed Mr. Gandolfini’s lead in using a non-estate planning specialist to draw up his will. Presumably at the time, his estate was worth much less and he simply wanted to provide for Cooper and Cooper’s mother. But as his estate and family grew, it was important for Mr. Hoffman to review his plan with an attorney who specialized in the field.
Estate planning, and in the process contemplating one’s death, is few people’s favorite activity. And, unfortunately, it’s not a “once and done” task. Estate plans should be reviewed whenever there’s a change in circumstances, such as when children are born, wealth increases, a move to a new state, a disability occurs, and every five years in any case. Using a non-estate planning specialist or DIY computer program creates additional risks. No one can know what he doesn’t know.