Anna's Estate Plan Is Not Completely Worthless – It Can Always Be Used as a Bad Example
by Richard Keyt, Arizona Estate Planning Attorney
June 2, 2007
Poor, poor Anna Nicole Smith, also known as Vickie Lynn Marshall. Controversy followed her throughout her adult life, and now it follows her in death. Her untimely death opened a new chapter of prospective litigation for her family. Anna's legacy to her only living child Dannielynn is years of expensive public litigation because she did not have a good estate plan.
Ann Nicole Smith's Will is a Classic Example of Why Everyone Needs a Well Designed Estate Plan
Some estate planning attorneys might say that even though Anna Nicole Smith signed a Will on July 30, 2001, she died without an estate plan. Here are my observations about Anna's Will:
1. Son Daniel is the Sole Heir. Article 1 states:
“I have one child DANIEL WAYNE SMITH . . . . Except as otherwise provided in this Will, I have intentionally omitted to provide for my spouse and other heirs, including future spouses and children and other descendants now living and those hereafter born or adopted, as well as existing and future stepchildren and foster children.”
Anna's Will expressly states that it does not provide anything for Dannielynn, her child born after she signed the Will. If Anna married Howard K. Stern, the Will also excludes him.
2. Assets Left in Trust to Daniel. Article II states:
“All of the property of my estate (the “residue”) . . . . shall be distributed to HOWARD STERN, Esq., to hold in trust for my child under such terms as he and a court of competent jurisdiction may declare, such that my children are distributed sufficient sums for the health, education, and support according to their accustomed manner of living from either the income or principal of the trust until age twenty-five; and are at that time given one-third of all of the income of the trust and one-third of the principal of the trust as then constituted; and at thirty are given one-half of the income from the trust and one-half of the principal of the trust as then constituted; and at thirty-five are given all of the principal of the trust.”
This Article gives everything in trust to Daniel Wayne Smith, Anna's now deceased son. The Will is silent on whether Daniel must be alive at the time of Anna's death or if the estate goes to Daniel's estate if he were deceased when Anna died.
Article I says Anna has one child, but Article II refers to “children” and “their,” which is inconsistent with having one child. Query: Does the language in Article II suggest that Anna intended the trust to benefit more than one child?
Note also the particularly troubling language that says the terms of the trust are to be determined by the trustee and a court. I have never known an estate planning attorney to create a trust that does not contain terms, conditions and instructions to the trustee on what to do with the assets of the trust. Nor is it practical for a trustee and a court (what court?) to guess about the terms of the trust. How does the trustee go about drafting the terms of the trust with the court? This clause is an invitation to all interested parties to litigate the terms and conditions of the trust.
3. Restatement that After Born Children Are Omitted. Article 6.2 states:
“Except as otherwise provided herein and in the Trust, I have intentionally omitted to provide for any of my heirs, or persons claiming to be my heirs, whether or not known to me.”
This provision further reinforces Article I by restating that the Will provides only for Daniel Wayne Smith, Anna's now deceased son, and that Dannielynn is excluded.
4. No Living Trust. Apparently Anna Nicole Smith did not have a trust. If she had a trust at the time she signed her Will, the document should have provided that all of the residue of her estate would go to the trustee(s) of her trust to be held and administered as provided in the existing trust. A good trust based estate plan consists of a Revocable Living Trust and a Will with a “pour-over clause,” which is a clause that says everything in the probate estate that is not given away goes to the trustee(s) of the pre-existing trust.
Unfortunately for Dannielynn, her mother's estate is a mess and it may take years of costly litigation to determine, what, if anything, she inherited from her famous mom, Anna Nicole Smith, aka Vickie Lynn Marshall.
5. Who Inherits Anna's Probate Assets? Anna's Will left everything to her son Daniel, but he died before she did. The Will expressly disinherited her only living child, Dannielynn. The Will did not contain language normally found in a Will that says that a gift to an heir will lapse if the heir is not alive when the maker of the Will dies.
6. Which Law Applies to Anna's Probate Assets? Was Anna a resident of California or the Bahamas or else where at the time of her death? The law of the applicable jurisdiction (where ever that may be) will determine if Anna's probate assets go to the estate of Daniel Wayne Smith, Dannielynn or somebody else. A court could apply the law of intestate succession (i.e., the statutory method of inheritance when somebody dies without a Will) because the Will does not name an alternate heir in the event Daniel predeceased Anna. and because Dannielynn was expressly omitted as an heir.
Lessons to Be Learned
Anna Nicole Smith's lack of a good estate plan illustrates a valuable lesson for all of us:
Because we will die one day, our families and loved ones will suffer unnecessarily if we do not have a properly drafted estate plan in place to protect them.
If you do not have your estate plan in order, the legacy you leave your loved ones may be:
- The wrong people may inherit your property.
- Wasting large sums of money and time in court litigating over your assets and/or guardians of minor children.
- Airing of your “dirty laundry” in open court.
- Loved ones who inherit property outright at a young age when they will quickly spend their inheritance because they lack the maturity and knowledge to protect their inheritance.
- The lack of a properly drafted Personal Asset Trust™ that can protect an inheritance from creditors, predators (ex-spouses and con-artists), and bankruptcy court.
It is very common for people to send thousands of dollars on things like plasma TVs, computer systems, music systems, cameras, cars, boats and trips, but nothing to protect their families and loved ones if they were to die. As an estate planning attorney, my motto is:
Spend a little money on a good estate plan to protect your family and loved ones before you spend a lot of money on your adult toys and fun.