What Can We Learn From Phillip Seymour Hoffman’s Death?

Apr 16, 2014

Philip Seymour Hoffman’s death has sparked many conversations: dialogues about drug use, about the tragedy of such a talented life cut short. It’s also started perhaps an unexpected discussion: one about Hoffman from an estate planning perspective.
Though this amazingly gifted actor died with a great legacy of films behind him, he also died with an estate worth $35 million. While he did have a will, there was little other planning done: a seemingly shocking oversight, considering both how much his estate is worth and that he left a partner of 14 years and three young children. Another oddity? Hoffman’s will dated back to 2004, when his oldest son, Cooper, was only a month old, and before the births of his other children, Tallulah and Willa.
As a result, from a tax standpoint, his estate will suffer: over $15 million is owed in real estate taxes ($5 million of which will go to the state of New York and $10 million of which will go to the federal government).

 

While Hoffman left behind a messy situation for his loved ones, there are many lessons to be learned here.

 

Stay Current
First, though creating a will is crucial, updating said will is equally important. Hoffman’s was signed in 2004, 10 years prior to his death. Because your situation may change drastically, it’s important to continue to update your will as needed. In Hoffman’s case, he had two additional children and separated from his partner Mimi—significantly changing his circumstances.

 

Trusts
A trust would also have been a good option for Hoffman. He and his partner, Mimi O’Dowd, were not married. Had they been, they could have saved millions. However, if Hoffman and O’Dowd were absolutely set against marriage, trusts would have been the best way to safeguard their assets. Hoffman could easily have left assets to O’Dowd in a trust.

 

Why a trust? The assets would have been protected, as Mimi would have had access to them, but they would not have been subject to taxes. They would also have been safe from creditors or from a future spouse if Mimi remarries in future.

 

A trust would also have been ideal for Hoffman’s young children. Currently, anything that Mimi disclaims will go into trust for Cooper, who will receive half of the amount at age 25 and the full at age 30. However, Hoffman could have arranged his own trust for his son, with different stipulations; for instance, he could also have made access to the assets contingent upon certain milestones, such as college completion. Hoffman stipulated that his son be raised outside of Hollywood—his parental concern perhaps should have extended to estate planning matters as well.

 

Privacy

 

Another factor, perhaps more applicable to Hoffman and other actors but certainly of concern to many, is that of privacy. Had Hoffman opted for trusts in favor of a will, the public wouldn’t be privy to his will or his estate-planning efforts—an important element for decedents wrapping up an estate at a particularly painful time.

 

Be Aware of the Options
Speaking to an experienced estate-planning lawyer is above all crucial. A responsible attorney would have advised Hoffman to ensure that he addressed his younger two children in his estate-planning efforts and might have suggested a variety of trusts in addition to his will.
Though tragic, Hoffman’s death provides an opportunity for us to learn from his mistakes, many of which could have been easily rectified, and shows that a little advance planning can make a situation far more tenable for family and loved ones.

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