The recent death of Whitney Houston has been an occasion for the music industry to mourn one of its greatest talents. For estate planners, it has been an occasion to learn from mistakes she and her attorneys made in her own estate plan.
Two weeks ago, Whitney Houston’s will was filed with a probate court in Atlanta. As many expected, she named her daughter Bobbi Kristina as the sole beneficiary. As pointed out in a recent Forbes article, Whitney Houston relied only on her will to dispose of her estate.
The will itself, surprisingly, dated back to 1993, though there was at least one amendment to her will made in 2000.
The fact that Houston chose not to take advantage of a trust based estate plan is somewhat surprising, given that wills-which pass through probate court-become public record, can be costly and time-consuming and can open up the possibility of challenges down the road. Going with a trust-based estate plan has the advantage of keeping matters regarding one’s estate private and avoiding the costs and hassles of probate.
The singer’s will did actually create a trust, but a testamentary one-meaning it took effect at her death. The trust called for Whitney’s assets to be held for the benefit of her daughter. While testamentary trusts are useful, they don’t have the privacy and probate-avoiding benefits of a living trust.
The trust itself calls for periodic distribution of the money, allowing them to be spaced out. Under the trust provisions, Bobbi is set to inherit 10 percent at age 21, another one-sixth at 25, and the remains at 30.
Whitney’s will names her then-husband Bobby Brown as guardian for her daughter Bobbi Kristina. Oddly, this was not changed after the couple’s 2007 divorce, raising the concern that Bobby Brown may seek to take control of Bobbi Kristina though a conservatorship should she be found incompetent and at risk of harm.
Also surprisingly, the will was signed February 3, 1993, which was several months following Whitney’s marriage to Bobby Brown. This means that she disinherited her husband. In most states, a disinherited spouse will still have a right to an “elective share” of a deceased spouse’s estate.
Under Georgia law, this is not permitted, though the state does allow for a limited spousal allowance. What matters, though, is that Whitney created the will in New Jersey, and the law of the state where one lives at the time of one’s death controls this point. So if she had been married to Brown at the time of her death, he would have had the right to an elective share.
Source: Forbes, “Whitney Houston’s Will Was Far From Perfect,” Danielle and Andy Mayoras, March 15, 2012.