- Robin Williams was an esteemed actor and comedian before his suicide in August 2014.
- His passing may lead to financial troubles for his family in managing his estate.
- Estate planning is important to ensure that a person's assets are accounted for after death.
When celebrated actor and comedian Robin Williams, 64, took his own life in August 2014, it was unclear what would happen next for his family and estate. Williams, who was often described as a comic genius, leaves behind his third wife and three adult children from his two previous marriages. Following Williams' death, many speculated his family might face financial troubles in managing his estate. In a 2013 interview, Williams told Parade that he returned to television because he had "bills to pay" and that he was selling his 653-acre Napa Valley ranch, Villa Sorriso, because he could no longer afford it. The property has been on the market since 2012.
Public records revealed that while Williams' real estate was of significant value-approximately $25 million in equity-he also had mortgages amounting to $7.25 million as of 2011. According to Forbes, Williams' net worth was pegged at $50 million at the time of his death, down from an estimated $130 million only two years ago.
Still, estimates for Williams' lifetime earnings could have been substantial, but these estimates will not be factored into a death benefit from life insurance. Despite speculations of financial struggle, however, Williams was found to have taken advantage of careful estate planning in order to ensure financial security and stability for his loved ones long before he passed away.
Robin Williams passed away in August 2014, he was 64.
Trust Funds for his Children
Trust funds are a key estate-planning tool because they maintain control over one's assets. In the case of many high-profile people like Williams, trust funds also keep details about one's assets private, as opposed to wills, which are published in court records.
Williams was found to have his assets divided into at least two different trusts - one for his real estate holdings and another as part of his 2009 divorce settlement, which listed his three children Zack, 33, Zelda, 25, and Cody, 22 as beneficiaries. The latter trust was divided into three equal distributions that were set to pay out lump sums to his children when they reached the ages of 21, 25 and 30. At the time of Williams' death, the trust fund he set up for his children was already in effect, with the sums guaranteed to his children regardless of the status of his other assets.
Real Estate Holding Trusts
Williams' irrevocable real estate holding trust, named "Domus Dulcis Domus" which translates to "Home Sweet Home," was believed to have been created, in part, to minimize estate taxes. Real estate holding trusts, when made irrevocable and established for immediate use, can often reduce a sizeable portion of a person's taxable estate. In Williams' case, placing valuable real estate like his home in Tiburon, CA and Napa Valley ranch in a trust provided his family with important equity in the properties in addition to protecting them from estate taxes. If Williams' Napa Valley property were to sell, the proceeds would be directed to the trust itself.
If both properties were not held in an irrevocable trust, a large percentage of the home values would have been due as estate tax, which would have dramatically reduced the family's holdings. With careful estate planning, Williams made a conscious effort to protect his loved ones after his passing. Estate planning can be essential in ensuring not only financial stability for your family but also secure asset management.
Setting up a Trust
When planning your estate, there are several types of trusts to consider, each having various benefits and restrictions. There are two basic types of trusts: living trusts and testamentary trusts. Williams chose to establish living trusts, which are active while the individual is still alive. Testamentary trusts, however, are set up in a will and become active only after a person's death when the will goes into effect.
Trusts can either be "revocable" or "irrevocable." Irrevocable trusts transfer control of the assets from the individual to the trust itself, where changes typically cannot be made without the beneficiary's consent. Testamentary trusts must be irrevocable since they become active after the individual's death. Additionally, appreciated assets in an irrevocable trust are exempt from estate taxes, while similar assets in a revocable trust are not. A revocable living trust allows an individual to maintain control of their assets and revoke or change the terms of the trust at any time. Some common types of living trusts include "AB" living trusts, joint living trusts and individual living trusts.
AB living trusts are commonly used by married couples and created by both spouses. AB trusts also allow for the creation of children's sub-trusts, which makes them especially ideal for blended families. An AB living trust identifies spouse "A" and spouse "B" while outlining permissions to manage assets after the death of either spouse. In an AB living trust, when the first spouse "A" dies, the surviving spouse "B" may use the trust's listed assets during his or her life but cannot alter the ultimate beneficiaries for properties added to the trust by Spouse "A." Spouse "B," however, may add assets to the trust during his or her life and control the beneficiaries for those assets.
Joint Living Trusts
A joint living trust involves both spouses, where each spouse creates the rules for how the assets will be managed and distributed. Each spouse will contribute property and control the beneficiaries for their individual property as well as their share of joint property listed in the trust. Joint living trusts allow each spouse complete control of the trusts' assets and either spouse can revoke the trust at any time. When the first spouse dies, the surviving spouse takes control of all assets in the trust and will leave what remains at his or her death to their beneficiaries. Joint living trusts can be beneficial in community property states since they use assessed property value at the date of death as the cost basis for the asset, or the value against which taxable gains will be measured.
Individual living trusts are useful to those who want to pass down a separate, non-marital property to a certain beneficiary - usually a child or grandchild. These trusts are especially useful to unmarried couples. Jointly owned assets, on the other hand, are difficult to add to an individual trust since ownership of the asset must be separated.
Setting up a trust can be a helpful tool for both individuals and their families in ensuring that their assets are taken care of according to their wishes. If you or someone you know is looking to set up a trust, contact an attorney. Wang IP Law Group, P.C. attorneys can assist you in a variety of estate planning needs including wills, trusts and trust administration, probate administration and litigation, and estate planning and administration. For more information, please visit our website at www.TheWangIPLaw.com.