In 2014, the Will of the Oscar-winning actor, Philip Seymour Hoffman, was released to the public. Hoffman, star of such films as Capote and Charlie Wilson’s War, is said to have amassed a fortune of $35 million prior to his death in February this year.
Within his Will, Hoffman left his entire fortune to his partner Mimi O’Donnell, defying advice to put in place trusts in his will for the benefit of his three children: Cooper, Tallulah and Willa, effectively leaving them with nothing on his death.
The leaving of an entire estate to a partner on death is normal and, in fact, is probably amongst the most common instructions we receive from our clients who want to make sure that their spouse or partner is adequately provided for. Often, there is an assumption made that, on the survivor’s death, the spouse or partner will then pass on their own estate to the children.
However, when someone dies at a young age the likelihood is that their spouse or partner will, at some point, move on to another relationship (Hoffman was 45 and had a drug problem, so he must have been aware of the risks to his health and that his partner might meet someone new if he died). The surviving spouse or partner may even marry someone else. We often find that a new relationship can have unforeseen consequences for children from another marriage or partnership and, using the death of Hoffman as an example from an English perspective, I’ll try and highlight a couple of the dangers of making assumptions about what happens to your estate after you’ve died.
If Miss O’Donnell were to marry someone else this would have the following effect:
1. Any Will she made before her marriage would be revoked;
2. If she did not subsequently make another Will and died before her husband, her estate would pass as follows, assuming she died after 1st October 2014 (as the law in relation to the intestacy rules are subject to change after October 2014):
Her husband would receive a statutory legacy of £250,000
Her husband would receive all of her personal possessions
Half of her estate would pass to her children but half would pass to her husband
While the children would still have a fairly reasonable inheritance (!) I’m sure their father would have anticipated that they would receive the entire estate on O’Donnell’s death.
The situation could be even worse if O’Donnell were to fall out with her children. A person is free to leave their English estate as they see fit. There would no legal obligation on O’Donnell her to leave her estate to her and Hoffman’s children and if she were to remarry or have another relationship, she might make the decision to draft a Will leaving her whole estate to her husband or partner, cutting out the children altogether (although they would be able to consider a challenge to the Will).
While Hoffman seems to have been keen not to have his children perceived as ‘trust fund kids’, by placing his estate in to a discretionary trust he could still have provided for his children while ensuring that they had no absolute entitlement to his assets. He could have instructed his trustees that his children weren’t to receive any inheritance until reaching a particular age, or set certain qualifying criteria that the children needed to reach in order to receive a defined sum. He could even have designated that the funds in the trust were only to be used in certain circumstances e.g. to assist in setting up a business.
By not putting even a small part of his estate in a trust for his children Hoffman has created a risk that they might never see any of his fortune. It’s a small risk admittedly, and the more likely outcome is that O’Donnell would ensure that they were provided for both during her lifetime out of the legacy from Hoffman and on her death, but it’s a risk that nonetheless could have been avoided and hopefully shows the importance of obtaining legal advice on the distribution of your estate.
