The twice-divorced comedian took his final distribution of assets extremely seriously but glitches still dragged out the process. Estate planners should treat a year as the best possible scenario.
When Robin Williams died in August 2014, it rapidly became clear that his estate plan was tighter than his often-manic career and complex personal life would have otherwise indicated.
Williams had been married three times and was living with the third wife at the end. The divorces had been settled and his kids were not only grown but named in a network of trusts to ensure that his wealth transferred smoothly.
Nonetheless, it took the estate still took a little over a year to settle all family disputes and move toward the final distribution stage.
With this example in front of us, it’s clear that when $100 million is on the line, nothing happens immediately — there’s always going to be a little storm and stress as the numbers get huge.
Let’s take the Williams estate as a best-case scenario. For your clients, a few of these drag points may not be a problem, but undoubtedly others will emerge.
Start with family tension
Williams’ three kids evidently weren’t fans of the stepmother he married shortly before his death. They wanted all of his personal effects back for sentimental reasons.
The widow got the house in the will, so she tried to keep the stuff left in it under the rubric of marital property.
Since she also wanted more cash from the estate in order to keep the household humming, the bikes, jewelry, games and toys Williams accumulated became de facto hostages to the negotiation process.
For better or worse, a lot of that stuff was worth money in addition to its sentimental value. Whatever the motive for handing it to one side of the family or the other, the lawyers needed to get involved.
One relative’s sentiment will always brush up against another relative’s bottom line. Evaluating those conflicting priorities will engender disputes that take time to resolve.
This one was relatively simple. The widow got a little more cash and the marital property that was special to her, while the kids sent a fleet of trucks to collect the rest.
If the kids hadn’t freed up the cash, odds are good the process would still be dragging on into the second year since Williams’ death.
The moral: your clients can close every loophole they see when they’re alive, but there’s always the chance that surprises will emerge after they’re dead and can’t react to new developments.
Williams was extremely careful with his money and his intellectual property, even locking down his image and publicity rights for the next quarter century.
The wealth was assigned. But the line between the house he left his widow and its furnishings was just blurry enough to be worth fighting over.
Privacy wins the closing round
Meanwhile, Williams kept the details of his last testament under wraps.
The real trusts for the kids are still secret. The ones people have pondered for a year now are at best shells if they even still exist at all.
It’s not really surprising that the trustees didn’t waste a lot of time covering the star’s tracks after their existence became a matter of public record.
It was a close thing. The lawyers could easily have built the trusts well enough to avoid public disclosure in the first place.
The problem — and the trusts themselves — emerged when Williams’ high-powered entertainment lawyer Gerard Margolis died back in 2008.
Margolis also happened to be the co-trustee on the older of the two trusts set up for the kids. His death left them both with only one trustee and no formal process in place to fill the hole in the line of succession.
Because the family wanted to be sure two people would be watching the trusts at all times, the sole remaining trustee had to petition the court to get a colleague appointed and then confirm the way the reins would pass from there.
It solved the immediate problem, but also turned the trusts into a matter of public record.
We now know how Williams planned to distribute a few of his assets. We know when his heirs would get their principal payments, roughly where the money would come from and we even know quite a few of the personal family details as of 2010.
With the kids currently being harassed online by strangers, that’s a profoundly bad thing.
Every trust needs to take at least basic measures to shield itself for courtroom and public scrutiny. That means avoiding formal petitions whenever possible.
If the documents had given the trustees the power to appoint a replacement in an emergency or assigned a trust protector to manage succession, there would have been no need to file the public appeal in the first place.
While there’s some risk in giving trustees more leeway to adapt to unforeseen circumstances on their own, having multiple trustees and an internal process for replacing them if they don’t work out helps to curb the potential for abuse.
And if the Williams trusts had worked that way, we probably wouldn’t know anything about them today.
Decanting doesn’t solve everything
Once the trustee situation resolved, they were probably quick to create new trusts that could still travel under the radar and reflect Williams’ current situation and wishes.
The star created each of the old trusts right after a divorce, using the first one in particular to hold life insurance as security in the event he died before paying off his alimony obligations. These are primarily irrevocable life insurance trusts, or ILITs.
In 2011, he married again. By this point, the kids are all grown and would nominally be in line for lump distributions from the assets put in trust for them.
He had serious legal power on his side. In the end, they probably triumphed over what would have been disaster after disaster. That’s what it’s all about.