Celebrity Estates: Heath Ledger’s Estate Plan and the Conversations Families Avoid

Speaker A: Welcome to the Celebrity Estates Wills of the Rich and Famous podcast. In this podcast, we break down high profile celebrity estate planning cases for advisors and their clients. Most celebrity estate catastrophes are based on the same issues that everyday people face, just with the volume turned up. Our goal is to identify and extract the individual estate planning issues that lie at the heart of each story. We then discuss what advisors should expect and how to avoid common pitfalls. Hosted by WealthManagement.com senior editor David Lenok.

Speaker B: Hello everyone and welcome to the latest Episode of wealth management.com Celebrity estates Wills of the Rich and Famous for anyone new to the podcast. And each installment, myself and a guest take on a different celebrity estate and attempt to extract some key lessons that planners can apply to more traditional clients. The idea being that celebrity estate planning stories, although often ridiculous in their details, can generally have at their cores very basic issues that can just as easily apply to non famous or fabulously wealthy clients. Learn more about estate planning and how you can better serve your clients. Visit wealthmanagement.com trusts estates our, uh, monthly journal features tax law updates, wealth planning, retirement planning and much more written by thought leaders in the industry. That's wealthmanagement.com trusts estates. We're joined today by Brad Ripinski. Brad is the director of estate tax and financial planning at Signature Estate and Investment Advisors. He works with high net worth families on estate planning issues that frequently echo the pitfalls seen in celebrity estates. From outdated documents to misaligned beneficiary designations. He regularly sees how plans that appear sound on paper can unravel when key details aren't revisited or properly coordinated. Thanks so much for joining us, Brad.

Speaker C: Thanks, David. Really nice to be on today.

Speaker B: The subject of today's episode is one we covered ages ago on the show, but whose story is worth revisiting. Beloved actor Heath Ledger. Ledger was an Australian actor who appeared in over 20 films across a wide variety of genres, beginning with air quotes, honky roles in films like 10 Things I Hate about you. He had his critical breakthrough playing closeted cowboy Ennis del Mar in 2005's Brokeback Mountain, a role for which he was nominated for an Academy Award. Ledger sadly passed from an accidental prescription drug overdose in 2008, just before the release of the Dark Knight, in which his portrayal of the Joker would launch him into posthumous superstardom and earned him another Oscar nomination. Ledger left behind a young daughter, Matilda, with former partner, fellow Academy Award nominated actress Michelle Williams. Although the two were not together at the time of his death, he did have a will, however. Uh, it was signed and executed in 2003, before his relationship with Williams and well before the birth of Matilda. As such, neither were included, and his roughly 16 million dollar estate was to be split equally between his parents and siblings, with his father Kim as executor. Though protections exist in many US jurisdictions for afterborn children and omitted spouses. As Ledger's will was executed in Australia, Matilda was in danger of being left out completely. Luckily, the remainder of Ledger's family came together and acknowledged that Matilda's well being was an absolute priority. And they all voluntarily placed the entire balance of Ledger's estate into a trust for which she was the sole beneficiary. Despite the protections in place to safeguard against such things out of date, estate planning documents still carry a great deal of risk. And sadly, not every family can be trusted to come together like the Ledgers and right the perceived wrong at great monetary sacrifice by themselves. Brad, do you mind expanding on why it's so important to keep estate planning documents up to date and maybe some techniques practitioners can use to keep such issues front of mind for clients?

Speaker C: Yep, absolutely, David. So I think financial planning, estate planning, it's like a big puzzle. And the puzzle pieces move around over time, right? Due to things like birth, death, marriage, divorce, income tax law changes, estate tax law changes, net worths, growing kids, getting older. And I think that you, uh, want your plan to evolve over time with what's going on in your life. So I think you have to really lean in annually to what's going on. Uh, as far as where do I think you can start? Keeping an updated net worth, I think, is really integral to staying ahead of the game. You can ask a lot of questions to clients as you're going through net worth. I think a lot of clients do things on their own and just reviewing annually, the net worth allows clients and advisors to keep on the same page with what's going on.

Speaker B: Yeah, and the nice thing about those conversations too, other than just uncovering assets or moves they may be making without having told you, is that it gives you an easy entree into asking questions about softer topics like their family and the next generation without it looking like you're fishing for the next generation of clients in some sort of untoward way.

Speaker C: Yeah, I think that. And who really likes talking about death every year?

Speaker B: That's the other part. Right. You have to overcome the stigma of this being, let's go talk about death and money, which are both terrifying and also your family, which nobody wants to talk about. And then in addition, we're going to do it every year. And I also have to convince you that an estate plan is a document that requires being revisited every year. It's not just a will that I throw into my desk drawer and we never think about it again for 40 years.

Speaker C: Yeah, that's right. And I think sometimes there's a real friction between the estate planning and execution. I know my background comes from some of the larger institutions. And for these institutions, it's really expensive when accounts don't have beneficiaries on them. Right. Clients and advisors call up when things have to go through probate and they have to move accounts around, ask a lot of questions. So I think large institutions sometimes often encourage clients to add beneficiaries to accounts, which can be really damaging when clients have met with advisors, estate attorneys created an estate plan, and sometimes those beneficiary designations, account titling can throw off the good work that clients do with advisors.

Speaker B: It's such an interesting point because it cuts both ways, right? Because those beneficiary designations are, as you mentioned, they're extremely powerful estate planning tools. And so that's why they can just as easily mess up a good plan if you do them incorrectly, as they can really reinforce a good plan if you do them properly and in actual under consultation with your advisor.

Speaker C: That's right.

Speaker B: So it's one of those things people don't think about. An estate plan is more than just a will and a couple other documents. It's really is the totality of these beneficiary designations, all of your end of life planning, all the, a lot of the back end of your retirement planning, even it could be argued this is all in the estate planning milieu. It's not just one document, it needs to be thought of as such, which makes it both, I think, a little easier to wrap your head around and also simultaneously even scarier because it's so big.

Speaker C: Yeah, I think that's right. And also it's a really complicated subject with tons of little intricacies that common people don't understand. We can start with the fact that estate documents are written in legalese. And while legalese looks like English and sometimes can sound like English, I think for a lot of people it's not English and it's really confusing. And they don't realize that an estate plan can turn on one word. Right? May versus shall for existence. Your clients read it and see the same thing. But we know as planners, attorneys, that can be hugely different in the how the outcome of what happens.

Speaker B: And that also, interestingly, I can Tell from firsthand experience. That goes not just for laymen, that goes for other financial professionals as well. And it cuts a number of ways. We all have our own lingo, and sometimes the words overlap. I know specifically the word fiduciary, where if you say it to a financial advisor versus an attorney, you're really going to get two different reactions about what that word means. And one of them is fungible and one of them is not. Knowing the difference is pretty important.

Speaker C: Yeah, no, I think you're right there. And I think a lot of clients think, hey, my advisor has the best intentions looking out for me. And you like to think that every advisor does. Sometimes it's because the advisor is looking out for their own interest or their own pocket. You hope that's not the case, and that's not the case with most, but you just really never know. And I think clients don't understand what that fiduciary means. And so you really want to understand that. And I think you want to meet with multiple advisors. For me, you have the A scenario when clients and all their advisors are meeting either annually or biannually. I think that's a great start for clients. It allows clients to hear all their advisors in one place. Right. There's no loss of communication. If something needs to be changed. Everyone kind of comes out of a meeting knowing what they have to do and keeping each other accountable. And then I would add, on top of that, there's a plus scenario where you have all the clients, all the advisors, and multiple generations are meeting so that there's really an understanding up and down the family lineage. On, um, hey, there's this wealth involved. Here's kind of the plan for it. Maybe at some point we're ready to give the next generation a voice in how things flow. But I, uh, always think to myself, you have a lot of advisors that will say to clients, hey, it's your wealth. You do whatever you want with it. You have. That's one version of it. I think that's maybe the way things were, were done also.

Speaker B: What do I need you for?

Speaker C: A little bit. There's still the. Do you want asset protection? Do you want the kids to be able to do what they want it? You have advisors that tell clients that. And you want to leave it in trust. Great, leave it in trust. You want to leave it in outright. It's your money. Do what you want. But I look at that scenario versus the scenario where you bring the children into the conversation as well, and it can really add a layer of family Stewards of the wealth continuing and leading to much better synergy between everyone. What's the better scenario? One where the advisors are talking to the children, we're maybe making annual exclusion gifts, we're training kids how to be stewards of the wealth? Or one where one day you're not wealthy and then the next day something happened to both your parents and you are wealthy? I think there's a mismatch there. And I think we as advisors can do better about bringing everyone together and really make that the goal for families. Not every family's kids are ready for that, but I think over time there's a job to, to say as advisors, hey, how can we make informed, educated decisions with the whole family? Be thoughtful and efficient with the assets? Does that create a better stewards of the wealth and understanding of wealth?

Speaker B: Yeah, that's a great point. And for advisors that are more used to that more hands off approach of, you know, you tell me what to do and I'll do it with. In terms of what you want your wealth and legacy to be, who may, I guess, be concerned or may not come naturally for them, pushed into family topics, or they may view it as an overreach. How did you go about starting that conversation in terms of, hey, maybe we should get your family involved. Hey, what do your kids think about this?

Speaker C: I think it's. For me, it starts with just asking, hey, do your kids know about the wealth that you have? No matter really what the net worth is? And seeing what the client's reaction is. It's always funny to say, oh, this child definitely knows. This one has no idea. And, uh, then I'll ask them, hey, which of these scenarios do you think turns out better for families? And they're like, all right, how do we start that conversation? And I love letting clients know, hey, what about just a casual conversation? Bring it up. Hey, something happened to us and you inherited a million dollars. What would you do with it? What about $5 million? And what about $10 million? Phrasing it that way the clients don't have to say what the net worth is. They don't have to tell their children, but they can start with just a scenario to hear from their kids. Hey, here's what I would do with it. Here's where I think, uh, I would do. And you can talk then. All right, I hope this is what you do. Here's my fear. And I think once you give clients the ability to have that easy conversation, your worst case scenario is if something happens to you, your kids, at least have a conscience on their shoulder that you had a conversation with your parents about this, you heard them, you know what their hopes, dreams and fears are for you. And I think that's a lot better than no conversation at all. Which is where I think a lot of clients unfortunately end up. Hey, this is an awkward conversation. I'm scared that it's going to change how you react, how, how you are as a person, your motivation in life. If I tell you these numbers. But that's an easy way to just start, I think.

Speaker B: Yeah. And it's a real sticky feeling, I think, for clients too, because I know the example you just gave. It sounds, oh, it's a client talking to their sort young, teenage children. And we're using the word children, which also indicates a certain level of youth. But just as often when we're talking about children, we're talking about someone who's 45 and they still haven't had this very basic conversation that you would have with a child. So it's difficult to get clients out of that mode of these are my kids and who are they going to be? And he's 45, he's who he's going to be. Let's get these things straightened out.

Speaker C: It is funny to hear that from clients that they're grown adult children. They're still kind of think of them as being 15, 20 year olds that don't know a lot about the world. I think you nailed it. The other thing that I'll do is I'll invite the parents to say, hey, what if we have the conversation with your kids and we bring them into this meeting? I use the analogy with clients of both of my children play soccer. And when they were younger, I'd say to them, hey, you really need to use both feet, your righties, but you have to learn to use your left foot. And I always found it was in one ear, out the other earth. And then they come home from a soccer practice and say, hey, my coach showed me how to use my left foot. I have to start doing that more. Uh, and I'm like, I could have sworn I told you the same thing. Sometimes it's the voice delivering the message. And kids and their parents, there's a long history and it just may not be the right voice. But I think when you bring the advisor into the situation, you let them be the bad gore, you let them do the education. It just sounds differently to the kids. And also we talk about the great wealth transfer, the 90, uh, trillion or whatever it is, dollars passing between. I think there's not enough interactions between younger generations and the parents advisors. This is one way to make a difference and start the conversation. Hey, let's talk about this complicated topic. Let's talk about your options. What uh, are the benefits of receiving assets outright? What are the downfalls? What are the benefits of receiving assets in trust? And a lot of parents quite frankly aren't equipped to know all the answers to that. And so it puts the parents and the kids on the same side of the table. And I think that kind of leads to more unity.

Speaker B: That's a great way to put it. And having those conversations is both just a great way to meet the next generation and in the self serving sort of business way, make contact with them while still serving your clients. But also just is important for the estate plan that you're not just showing up as dad's lawyer or mom's lawyer that they've never met when they're in a time of great trauma and all of a sudden ordering them around on how things are going to go where in that situation. Even sort of small slights or things that would normally not bother them coming from this stranger at this bad time are going to get magnified. Whereas if you're. This is Coach Brad basically, uh, has been teaching me about money my whole life. It's that trust Coach Brad. But yeah, his dad's advisor, but he's my coach, he's been helping me. So it's not as bad. Even when you're telling them something they don't want to hear at a tough time there at least they have some grounding in our relationship together and that you're a person who has proven to be trying to help them.

Speaker C: Yeah, I think that's right. And that's not even just with kids. How many times do we see clients where one client has taken the burden or the enjoyment of the financial part of the uh, family's life and the other spouse is an unengaged spouse. I've unfortunately too many times had to deal with the situation where for the first time I'm meeting a spouse after the client's gone and that's just not an ideal time. You then have to build up this trust. They're confused, they're upset, they cry in front of you and they've just met you for the first time. Really not the ideal scenario, whether it's the spouse or the children, I think and really got to push clients. Hey, I know you're in charge of this, but let's find topics where both spouses can come Together and have an opinion. And I think estate planning is the perfect option. A lot of clients and spouses, they'll say, I know we have enough, I don't need to be a part of this. But the second you start talking about this is how your kids are going to be able to use your money, these are the rules that we've put in place. I think there's a lot more interest. I don't necessarily care about myself. I know I'm good, but I care a whole lot about my children and I do have opinions on them and potentially their spouses as well.

Speaker B: Yeah, I think it's really great that you bring up the idea of the spouse. I think especially in terms of the great wealth transfer, the spouses are very overlooked in this whole. Everyone is, both clients and advisors are all focused on, oh, this next generation is going to be inheriting all this stuff so soon, this great wealth transfer. And they're ignoring the fact that there'll be a lot of sideways transfer happening first before, before this waterfall down to the next generation. And so if you haven't gone through the trouble of that spouse was saying, I don't need to know this, you're going to get this first. How for however brief it may be, unless you plan differently. So a lot of, I think the spouses, in a lot of ways in this rush to engage the next generation, uh, the spouse has been the forgotten element in a lot of these plans.

Speaker C: That's right. I know my own situation. My father has been the one that does all the finances and my mom, she'll admit it, she's. I don't really know what's going on here. Statistically, males, if they're around the same age as females, are going to go first. So how many spouses are there that are going to be the ones that were not the financially related person that are going to be stuck having to deal with everything afterward. And I think especially as clients get older in retirement, part of our job is to look at the number of accounts. How much of a headache are things going to be when one or both of the spouses pass away? I look at it my job as a financial planner, estate planning specialist type person twofold. One, to give clients peace of mind about retirement and then two, can we give you what I like to call a state ease? Right. If and when that event happens that one or both of the spouses are gone, are, uh, things going to transfer as easily as possible and according to the intentions that both spouses hopefully came up with. So sometimes that means consolidating accounts, having less institutions. Maybe you're not getting as much investment gain. But I think simplicity, there's a reason why there's that saying, keep it simple. Right. I think a lot of clients have had to deal with parents wrapping up estates that had 10, 15 different institutions. And they really, I think, dislike their parents in some sense for that, or, uh, I wish it would have been easier. And so I think there's an opportunity when you look especially at the net worth and show clients, hey, if something happened to you, this is everything that's going to happen, and walk through it with them. I think clients, as they get old, they realize, all right, keeping things easy, making it more simple is part of the job for both the surviving spouse and the next generation.

Speaker B: Absolutely. And a lot of these couples, I think when we sit here and talk about spouses, I think the traditional, the very outdated, frankly, way of thinking about it, when we say spouses, that it's shorthand for the less sophisticated woman. And that is obviously not the case anymore. Uh, never was the case, probably, but certainly is not the case now. Totally. A friend of mine's parents, her father was a doctor, obviously very intelligent man, very educated, very sophisticated. But he'd been married to his wife since. Since before medical school. And she did everything. She was a doctor, she did literally everything for him. And she died first. And then you ended up with a man who's a doctor who didn't know how to deposit a check. And so we're talking about spouses. I really want to stress as regardless of gender and honestly, regardless of education or sophistication, it's just the. We're talking about the person who knows the finances and work and is familiar with them and the person who isn't. And it can cut in both directions. I think that's just like an important thing, that we're not trying to use spouse as like a dog whistler for gender or sophistication.

Speaker C: Uh, agree completely. I think that's. You want to set the expectation early on as an advisor. Hey, my expectation is that we're going to be meeting with both of you regularly. And if we can, if you have the right kids, we start meeting with them at some point too. I like to bring up to clients, and I always search for the right way to say this because no one ever wants to talk about mental decline. And so the phrase that I've come up with is, you never know when you're going to lose your fastball. And I think clients see that As a really gentle way of saying it. And everyone. Sports analogies work for a lot of people. And you say to clients, hey, who. If, God forbid, something happens to you, who's the person that's taking over? And does it make sense at some point to bring them into these meetings? And I think that's. Clients kind of come around, like, they realize, hey, uh, I might not be around forever or I might not have all my marbles forever. I, uh, think realizing that and leaning into that kind of conversation gently, it just leads to better outcomes as well.

Speaker B: Yeah. And it sounds like silly semantics. Right. But when you're dealing with these such difficult topics, a lot of times your biggest obstacle is just getting over that initial, oh, absolutely, we're not talking about this, or, no, you've insulted me somehow or that's not me. Anyone who's tried to take their car keys away from an older family member has gone through that. Just an initial. No matter how obvious it is to everybody that just. They can't see it themselves. And how you approach them about it initially is. And the language you use is very important. Otherwise, they could slam the door on the conversation permanently. And this, what we're talking about here, is often taking away the keys to their own life.

Speaker C: It's a hard thing. Yeah.

Speaker B: Uh, it's odd how there's little things like this, how the words you use to start the conversation, like you said, oh, if you lose your fastball, as opposed to, oh, you start to lose capacity. Now it's like, hey, hold on, you're insulting me. Everyone loses their fastball.

Speaker C: Right. On the opposite side. And I think this was effective. I knew an advisor earlier in my career who, when they had both clients in the meeting out of nowhere, in some sense, they look at one of the spouses and say, boom, you're dead. And then turn to the other spouse and say, what do you do? And I think that's a different way to do it.

Speaker B: That's a different way to do it. Yeah. That's the naked and afraid method. But I think drop them in the jungle and see what happens.

Speaker C: I think to that advisor's credit, it does shock you sometimes and get you to think, oh, my gosh, what would I do? And so there's two different approaches. But, uh, as long as it's effective, I think the point is that you're leaning into the conversation. The worst thing we can do as advisors is say, oh, this client's not ready, or I'm not comfortable. There's some awkwardness in this kind of conversation. I think you have to lean in and you find your way to do it. That's the important part.

Speaker B: We're just about out of time here. I'd love to thank Brad Rupinski for coming on and talking through. I guess there's legal aspects, but also a lot of soft things here that we talked about today that are nonetheless very important in convincing clients and making them comfortable with creating a plan that's flexible and can actually, uh, A plan for death that can survive life, for lack of a better way to put it. So thanks so much for coming on, Brad. Thanks for having me, David, and for all listeners. I'll see you. Or I guess you'll hear me on the next episode of Celebrity Estates Wills of the Rich and Famous.

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