5 Family Trust Lessons From Celebrities
Celebrities have trust issues—both personally and in the estate planning sense. But by the end, they can usually “trust” family again.
Here are five trust lessons from celebrities to keep in mind:
- Chris Warren from “High School Musical”: Trustee duties. Chris Warren’s parents were both the grantors and the trustees of his trust, and Chris himself was the beneficiary. While that’s perfectly OK, a court ruled that his parents unlawfully dipped into his trust for their own personal use, which is an absolute no-no for trustees. As trustees, they owed him a fiduciary responsibility to protect the money until Chris could rightfully gain access to it.
- “Slumdog Millionaire” child actors: Trust termination. Azharuddin Mohammed Ismail, 11, and Rubina Ali, 10, are child stars who have been provided for in a trust fund set up by the producers of the Oscar-winning movie. But their trust funds may be revoked if they can’t maintain regular attendance at school. A trust allows the grantor to specify conditions for receipt of benefits, as well as to spread payment of benefits over a period of time instead of making a single gift. When you fail to meet the trust’s conditions, the trust can terminate and the funds can be forfeited.
- Whitney Houston: Testamentary trust. A judge in Atlanta validated Whitney Houston’s “Last Will and Testament,” which poured the late singer’s money into a trust for her daughter Bobbi Kristina. A trust created by a will is called a testamentary trust. The will maker can set up her testamentary trust according to her own wishes. Whitney Houston’s will, for example, called for Bobbi Kristina to receive her first trust payout when she turns 21, another payout when she turns 25, and the remainder of the trust’s assets when she turns 30.
- Nelson Mandela: Type of trust. Mandela, 95, has been hospitalized for months. His daughters reportedly want to distribute much of his trust’s $1.3 million in assets, against the trustees’ (and Mandela’s) wishes. Trusts fall into two categories—testamentary or living. A testamentary trust transfers the assets of the trust to the beneficiary after the death of the grantor. By comparison, a living trust starts during the life of the grantor. In addition, an irrevocable trust can’t be altered or modified after it’s been created, while a revocable one can be modified. It’s important for your trustee to know—and most importantly, to carry out—exactly what you want out of your trust.
- James Gandolfini: Residuary clause. The “Soprano” star’s son Michael, who found his collapsed father’s body in their Rome hotel room, will receive most of his late father’s money once he reaches the age of 21 via a trust. The residue of Gandolfini’s estate that isn’t in the trust will be split by his wife, sisters and daughter. Typically, a will contains a “residuary clause” which divides the parts of the estate which are not used up by the specific bequests, estate taxes, and other expenses, and doles them out to specific persons.
“Trust” me, family trust issues can get complex. To learn more, you may want to contact an experienced Chicago trusts attorney.