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 tax taxes his plan will cause mirror those of James Gandolfini's, about which I commented on last year. Both movie stars used wills rather than trusts, which means that their plans and the contents of their estates are 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 -- perhaps not a reason to get married.
Mr. Hoffman's estate is estimated to be worth $35 million and could be subjected to New York and federal estate taxes totalling as much as $15 million. He executed his will almost 10 years ago, creating a trust for his son, Cooper, but making no provision 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 do already 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'Connell'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 -- 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 -- children, increased wealth, move to a new state, disability -- and every five years in any case. Using an attorney (or DIY computer program) creates additional risks. No one can know what he doesn't know.