Robin Williams' Estate Plan Spares His Heirs a Lot of Drama

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Robin Williams Portraits
Dan Steinberg/Invision/AP
The life of comic genius Robin Williams brought joy to millions of fans, and his tragic death has sent shock waves throughout the entertainment community. But as painful as his loss will be for family, friends and fans, it appears that at least according to early reports, Williams took care of business when it came to setting up a solid estate plan.

Keeping Private Affairs Private

Celebrity estate planning is often bungled, and the errors get magnified both by the large sums involved, and the fact that their deaths play out on the same public stage that they lived their lives on. (Think of Philip Seymour Hoffman, for example.)

Despite having a wealth of advisers, many wealthy entertainers fail to prepare adequately to handle the transfer of their real wealth after their death. Williams, however, apparently used at least one revocable trust for the primary portion of his estate planning, and that will likely be adequate to avoid some of the complications and tax liabilities that other celebrities' families have had to endure.

Most people think of wills as the basic must-have estate-planning document. But for those in the public eye, the downside of using a will as your primary document is that it's subject to the probate process, which invites public scrutiny of court-filed records. Especially in California, where Williams lived, the probate process is notorious for being long and arduous.

By contrast, revocable trusts enable people to arrange for the disposition of their assets after death without any involvement from a probate court. And, the public has no right to see the trust document. It's possible that we'll never know for sure what any trust that Williams created said. Because trusts keep personal business out of the public eye, even family members who disagree with each other can choose to resolve disputes privately, if they choose. That can avoid the negative publicity of will contests and keep arguments from escalating.

Is a Revocable Trust Smart for You?

Apart from the different procedural requirements, revocable trusts also give you the ability to control how and when your loved ones will receive your assets. For instance, in many cases, parents arrange to have money held in trust until children reach a certain age at which they believe they will be able to responsibly manage their finances. These provisions allow trusted advisers to act as trustee and handle financial matters during the early part of children's lives, and they ensure that children don't squander their inheritance quickly and find themselves with regrets later in life.

In addition, revocable trusts can give you flexibility in making changes to your estate plan as needed without necessarily having the same level of formality that a will involves. Given that Williams was married three times and had children from different marriages, making sure that his estate planning was rock solid in the face of changing circumstances was particularly important. Sometimes, families will break up into factions following a death, and arguments can become contentious when the estate plan isn't perfectly clear.

The downside of a revocable trust is that it tends to be more costly in terms of upfront fees than a simple will. However, unless you live in a state whose probate process is relatively simple, the extra cost in preparing a trust often pays for itself in not having to hire an estate planning attorney or pay court costs associated with probate proceedings after death.

Testamentary Trusts Are an Alternative

If probate isn't an issue, then you can get the same protection that trusts provide by setting up testamentary trusts in your will. If you go that route, the trust doesn't come into being until after your death, and your will automatically transfers your assets into the trust according to your instructions at that time.

One important thing to remember is that a revocable trust doesn't do you any good at all unless you transfer assets into the name of the trust.

Many times, people make the mistake of creating a trust, but never executing the real estate deeds to move their home into the trust, or leave financial accounts in their own names rather than making arrangements with their brokers to have accounts opened in the name of the trust. Even if you follow the common practice of having a backup will that puts any forgotten assets into the trust at your death, doing that leaves you vulnerable to probate, negating one of the values of having a trust in the first place.

No matter how modest your estate might be, having the right documents in place, and your financial house in order, can make a huge difference to your heirs if something happens to you.

You can follow Motley Fool contributor Dan Caplinger on Twitter @DanCaplinger.

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138 Comments

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billysbabyblues03

Yes, we lost a great person, comedian and actor. And like any other person out there he fought with depression and had his battles with alcohol and drugs. Like many, Mr. Williams fought until he just couldn't fight anymore. Whether the women, the drugs or alcohol or whatever drove him down, he always seemed on the up and up. He made so many people laugh over the years and I know that I will never forget him, or his character Mork. Bless his family, and may they find comfort knowing that he no longer has to struggle anymore, that he is finally at peace. I only wish that I had the privilege of having known him, and yet I feel as if I have. RIP Mr. Williams.

October 07 2014 at 1:10 AM Report abuse rate up rate down Reply
NEURONTOGO

To that justunion down the page,as far as cancer ,learn, do research,it's simple so you dont look for it, so your as responcible as any one.Robin was like Johnathan Winter's, His idol by the way, but more spontaiinenis,I got dizzy just listening to him.. He brought alot of joy to people and that alone made him special,but like those he pleased, he was also human ( jury is out on that one )There are going to be acusation's, as there always are.Be thankfull for the time he was here. R.I.P.

September 06 2014 at 6:58 AM Report abuse rate up rate down Reply
hokanut

A truly sweet man even after death.

September 04 2014 at 9:29 PM Report abuse rate up rate down Reply
hunklers71

Another man the courts allowed to be pillaged by women who took everything from him and people ask why he was depressed.

August 29 2014 at 1:22 PM Report abuse rate up rate down Reply
1 reply to hunklers71's comment
nannymel

Did he choose those women or were they forced upon him?

August 31 2014 at 12:44 PM Report abuse rate up rate down Reply
alfredschrader

Was probably the easy money trust that was his undoing.
May this poor man rest in peace.

August 23 2014 at 5:25 AM Report abuse rate up rate down Reply
wturner@waterbank.com

Revocable Trusts involve taxes when the assets are distributed. Irrevocable trusts involve taxes when the trust is created. Neither are worth a hoot but are sold by attorneys to generate revenue. Sick that they are doing it on the back of Robin Williams, a truly great and beloved man.

August 21 2014 at 5:04 PM Report abuse rate up rate down Reply
1 reply to wturner@waterbank.com's comment
billysbabyblues03

How true.

October 07 2014 at 1:12 AM Report abuse rate up rate down Reply
Fred

So

August 19 2014 at 10:01 AM Report abuse -1 rate up rate down Reply
weilunion

Capitalism, isn't it great? The poor man hung himself and the corporate press use this as a gimmick to talk about estate planning. How sad.

August 17 2014 at 10:20 PM Report abuse -1 rate up rate down Reply
khp350

depends on who you are

August 17 2014 at 1:55 PM Report abuse rate up rate down Reply
khp350

who are you

August 17 2014 at 1:55 PM Report abuse rate up rate down Reply