Prenuptial contracts walled off the assets from alimony claims
when the star was alive but death creates new questions about where a
late-in-life spouse fits into an estate plan.
It looked like Robin Williams had negotiated a smooth inheritance
solution for his widow and the three children he fathered in previous
marriages.
But now that the executors have started winding down the estate,
cracks have emerged in the way the once-ironclad plan spells out who
gets what.
While the trustees can probably smooth everything over here with
reference to the donor’s intent, the lesson is clear: every detail that
be disputed will be disputed, so spell out every single possibility and
define all your terms.
Life gets in the way of the best estate plans
As we discussed last year, Williams locked down his legacy in the midst of his second divorce.
At the time, he had three kids and nobody else he cared to leave his
money, so he shifted a big chunk of his assets into trusts that would
pay off on their behalf.
The kids all got equal shares. The will rolled everything left behind
in his taxable estate back into the trust structure where it could flow
back into the separate accounts.
But when Williams married Wife No. 3 a few years later, his lawyers
had to carve out a fair place for her in a plan that was previously
designed to run like clockwork.
The revised structure gave her the couple’s primary residence in
Tiburon, appraised at $7 million, and the right to draw enough cash from
the estate to keep the house running for the rest of her life.
On the surface, it seems as simple as it gets. The kids ultimately
get the fortune and the stepmom doesn’t get pushed out into the cold
with millions of fans watching.
And in that scenario, whatever feelings Williams had for all his
loved ones are expressed in full. But apparently there were enough vague
points to generate friction and drive widow Susan to petition for
clarity.
She wanted the trust to pay for a $30,000 renovation. Do upgrades and
repairs count under the category of “all costs related to the
residence?”
And the kids have apparently been trying to get access to what is
nominally her property in order to remove family memorabilia. Does that
infringe on her right to keep the contents of the house?
Tighter wording would have proactively answered both of these
questions, kept the family out of lawyers’ offices and preserved the
quiet around the dead star’s arrangements.
Williams’ lawyers could have spelled out exactly what belonged to the
kids and what should be considered normal furnishings of the house.
That way, while life may have gotten messy in the meantime, at the
end of the day everyone would know where all the collectibles and
costumes belong.
Instructions on transporting “misplaced” property to its proper place
and adjudicating disputes would evidently have been helpful as well.
Part of the problem here is that Robin Williams was famous as a
world-class collector of esoteric and sometimes surprisingly expensive
stuff: army men, scientific oddities, comic books.
As a result, it’s not just a question of who has a deeper attachment
to a particular toy but whether the cumulative weight of the
“attachments” ends up shifting the overall balance of inheritance.
Maybe Williams actually wanted the kids to have the stuff left in the
Tiburon house when he died. Either way, the time to spell it out was
when he was still alive to sign the trust documents.
Likewise, “all costs related to the residence” doesn’t cut it. It’s just too vague.
If the star wanted the trust to pay for repairs and renovations, the
documents should have spelled it out. And if he explicitly only wanted
to cover the current operational budget, the trustees would have known
what to tell the beneficiary when she wanted more.
Adding a belt to the rainbow suspenders may not be fun, but it lowers
the odds that any vague details left on the table will be big enough to
give anyone a strong reason to petition for additional guidance.
In that case, the world wouldn’t be talking about the Robin Williams estate plan today.
More terrified of divorce than death
It’s clear that Williams had been burned by $30 million in alimony
payments over his lifetime and the main thrust of his planning was to
prevent another settlement dragging him and his kids’ inheritance closer
to ground zero.
As a result, while he evidently tried to make sure his new wife was
covered in the event of his death, the provisions for Susan were built
on a foundation that wasn’t really designed for that purpose.
The trusts keep the assets from ever becoming community property
where a divorcing spouse could theoretically stake a claim. The
prenuptial contract further limits Susan’s options in the event of a
divorce.
But I haven’t heard of too many agreements that sign away elective
rights to the estate when it’s death and not divorce that breaks up the
marriage.
California will override the will to give a surviving spouse half the
community property. In some scenarios, that might have given Susan a
claim on the Tiburon house if she used money from her graphic design
career to make the mortgage payments.
Otherwise, when Williams died, he might have been worth $50 million,
most of which seems to have been separate property held in trust for the
kids. That’s going to be out of her reach any way you slice it.
And since she was only married to him for close to three years, there
wasn’t much time for her to vest in a lot of community property beyond
what his last few TV and voiceover gigs brought in.
She’s entitled to half of that share of the life they built together.
Anything he’d accumulated previously was his to give or withhold.
He gave her the house and the money to stay there for the rest of her
life. It takes a lot of money to keep a $7 million property running for
25 to 30 years, maybe more.
Call it maybe a $15 million bequest in all, which means that she’s
getting more than her mandated elective share unless you think he’s
raked in more than $30 million in the last three years.
While the kids say she’s making a naked cash grab by trying to amp up
the house and presumably its operating footprint, she’s not suing for
the elective share, so this is probably a better deal for her in any
event.
Ironically his other ex-wives – the kids’ mothers –got about $15 million apiece for leaving the man on their own accord.
Susan wasn’t with Robin long, but she stuck around until he left her.
Maybe she deserves a little more for loyalty. That was for him to
decide.
Source: Trust Advisor
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