A few months back we wrote about the untimely death of James Gandolfini and some of the estate planning lessons that could be learned from the tragedy. Paul Walker’s recent passing is yet another unfortunate Hollywood death that can serve as an opportunity to highlight some estate planning dos and dont’s. Details are now surfacing about Walker’s estate, and to his credit, Walker was about as well-prepared as any young, healthy 40-year-old could be from a planning standpoint.
What Kind of Estate Planning did Paul Walker Do?
Walker, famous for his role in the Fast & Furious film series, put an initial estate plan into place in 2001 shortly after the release of the first Fast & Furious film. He can certainly be commended for doing so at such a young age, as most twenty-somethings are wholly unfamiliar with the benefits of early planning. From the information that has been made public, it appears Walker had executed a Last Will and Testament and a Revocable “Living” Trust. By executing a will, Walker was able to appoint his father as Executor of his estate, making for a smoother probate process. While not the end of the world, dying without a will creates several additional complications, which we have discussed at some length in previous newsletters.
Through his will, Walker was also able to nominate his parents as guardians over his teenage daughter, Meadow. While not a guaranteed outcome, such a nomination will go a long way towards guiding the probate court’s decision. The mother of Walker’s daughter has been reported to have substance abuse issues. So while the probate court would certainly favor custody for the girl’s natural parent, Walker’s guardian nomination looks to be a potentially smart alternative.
Walker’s revocable trust is also a sound piece of estate planning. First, Walker’s will “pours over” into his revocable trust, meaning all probate assets will pass directly to the trust for the benefit of his daughter (assuming she is the named trust beneficiary). This will not only make for a less complicated probate process, but it will also allow for Walker’s estate assets to be managed by whomever Walker named as his successor trustee, presumably his parents.
Furthermore, any assets Walker placed into the revocable trust during his lifetime will bypass probate. Had Walker successfully placed all of his assets into the revocable trust while alive, probate would be unnecessary. Avoiding probate is generally a primary goal in one’s estate plan, so it’s safe to assume Walker probably intended to, or was at least instructed to fully fund his trust during life. Thus, one lesson that can be taken away from all this is that even after the estate plan is put into place, periodic reviews should be conducted to ensure that fiduiciary and beneficiary designations remain the same, and to see whether newly acquired assets should be placed into existing trusts.
Finally, Walker looks to have had a large estate, with some reports suggesting $25 million in assets. It does not appear that Walker engaged in any form of estate tax planning, although such information would not necessarily be revealed in the probate process. If in fact Walker did leave that large of a probate estate, the estate will incur a sizeable tax bill. A routine update with his lawyer may have saved his estate a great deal of money.
Walker’s death shows that there is no such thing as planning too early. Regardless of one’s age, there is always a minimal level of estate planning that can help eliminate the potential for catastrophe.