“Under Pressure.” These two words were said by the iconic David Bowie along with Queen singer, Freddie Mercury. Sadly, Bowie died back on January 20, 2016 from liver cancer at the age of 69 in Manhattan, New York City. Many celebrities, including Kanye West and Madonna, reacted with deep sorrow because they had lost the “Chameleon of Rock.” Bowie’s legacy still lives on through his children, Lexi and Duncan, along with his wife and now widow, Iman.
Bowie, initially, left the rest of his residuary estate and the remainder of Iman’s trust to Duncan and Lexi. Lexi was also subjected to her own separate trust until the age of 25. After the age of 25, she would be able to possess all the trusts assets. In the case of Iman’s trust, it did qualify for a full marital deduction, which created Bowie’s estate taxes that were to be managed by the children’s shares of the residuary estate.
Even though Bowie was iconic, his estate plan did suffer some consequences. With the $100 million value of his estate, Bowie did not create lifetime trusts that would have benefited his children. If he had created that trust, his children would have been protected from creditors for either his or her lifetime. It would have also given Bowie the power to use his full GST exemption. Since he did not achieve this step, both Lexi and Duncan did not have a special power of appointment over the trust.
One other mistake that David Bowie made in his estate plan was that he did not institute the decanting procedure, which an authorized trustee, not the grantor, transfers assets from one trust into another trust which contains the necessary changes that will achieve the intended purpose. Since he did not use this process, Iman’s trust could not be transferred from one to another.
When creating an estate plan, make sure to use the decanting process. The decanting process can be a powerful tool for post- mortem estate planning and should always be considered whenever testamentary trusts are created. Don’t be under pressure! Create your estate plan today!
Michelle Profit is an estate planning attorney serving Maryland and the District of Columbia. A Harvard Law School graduate, she has worked in the financial services industry for over 20 years. A dedicated advocate for all of her clients, Michelle Q. Profit personally handles each client case from start to finish to meet the client’s needs and objectives. Michelle listens in the consultation sessions and works with any other client accountants or financial planners to create a comprehensive estate plan.
Aretha Franklin, just like her fellow performer Prince, was undoubtedly talented beyond her years. Unfortunately, she did not have a will set up that would enable her loved ones to get what they deserved, including her child Clarence, who is 63 years old, that has special needs that require attention. If you follow in this path just like Franklin, the disbursements of money could be delayed, very detrimental family disputes may arouse, your estate as a whole may require extra taxes, and ultimately, your financial life could become a public record! If you have a child that requires special attention and you don’t have a will, your child will not receive any government benefits. If you don’t have a will or a trust, get one written up before it is too late! If you don’t follow through like Aretha did, your estate and probate deal will become public, not private.