The lives of the rich and famous often provide estate planning lessons for the rest of us. Few provide as many lessons as the short, unhappy life of Steve Bing. Bing, a Hollywood financier, philanthropist, and party boy, died last June at age 55, after jumping from a Los Angeles high-rise apartment. The aftermath may take many, many years to sort out.
Bing never married and left two children, who now have uncertain stakes in their father’s family wealth. Daughter Kira, 21, whose mother is former tennis pro Lisa Bonder, is fighting to have a role in her father’s estate. Son Damian, 18, whose mother is model/actress Elizabeth Hurley, is not as actively involved.
The Bings: Rich and Famous
The Bing family fortune goes back to the 1920s, when Leo Bing hit it big in New York real estate. Leo left son Peter a significant inheritance. Peter, himself a physician of some renown, and wife Helen had two kids, Mary and Steve. Long before Kira and Damian were born, Peter created six separate irrevocable trusts for future grandchildren, likely to avoid estate tax.
Leo apparently had not created a similarly structured estate plan. Steve Bing inherited $600 million, outright, when he turned 18. He promptly dropped out of Stanford and headed to Hollywood, where he spent freely and invested in winners (Polar Express) and quite a few losers (Beowulf). He gathered writing and producing credits, and became known as a big-time player, also donating significant sums to Democratic candidates and causes. But those close to him knew there was a dark side: drugs and depression.
Bing attempted to disinherit all children he might ever have in a will drafted after he learned of Hurley’s pregnancy: “Whether or not such child is mine, it is my intention not to provide in this Will for such child (or any other child as to which I may be the father) in this Will or for the offspring of any such child or children, whether now living or hereafter born.”
Last year, Kira asked about those Bing grandchildren’s trusts. The Trustees, instead of providing a copy, filed a lawsuit to disqualify Kira and Damian as “grandchildren.” The reason: their out-of-wedlock births. It’s true that Steve didn’t help raise either child and didn’t even acknowledge paternity until proved with DNA. But by time the lawsuit was filed, Steve had developed a relationship with his children, and he stepped into the dispute and sided with his kids.
In the lower court, the grandchildren won: “The Trusts contain no conditions, limitations, qualifications, or restrictions on the term ‘grandchild.’ The term, as used in the Trusts, is not reasonably susceptible to any alternate meaning.” The ruling is reportedly on appeal.
Kira, though, is not stopping there. A portion of Steve’s estate, valued at $337,000, is being probated, and Kira wants to be the administrator. The court required that she prove paternity, and a DNA test confirmed her standing. The court also required that the primary beneficiary – The Clinton Foundation – nominate her. She says she wants the job to fight a $7 million lawsuit filed against her dad.
What Can We Learn?
What can the not rich and famous learn from all this? Plenty!
- Irrevocable, in most cases, is irrevocable. Trusts, once made irrevocable, can be changed only under very specific circumstances. Deciding you didn’t like what you said decades ago? Not one of them. How could you fix it? Consider a trust protector who has power to adjust to changed circumstances.
- Carefully consider control vs. taxes. Tax planning often demands loss of control, as Dr. Bing discovered. How to fix? Be sure to check your comfort level with giving up control before you give assets away just to avoid tax.
- Words have meaning. Courts will dig beyond the plain meaning of words only if there’s ambiguity. It’s hard to find ambiguity in a plain word like “grandchild.” How to fix? Again, a trust protector. Or be sure to add conditions, limitations, qualifications. Note, though, that if social norms change dramatically, what you want could be deemed “against public policy” and ineffective.
- Words have meaning. Word in a will, like disinheritance provisions, will be followed. Even though Bing and his kids forged bonds well after the will was written, he needed to update the document to bring them back into the fold. How to fix? Review your plan regularly and adjust accordingly.
- Youth and wealth don’t always mix. Bing got rich very fast at a very young age. Whether that lead to his tragic end will never be known, but it might have. How to fix that? Reconsider large inheritances. Or leave the inheritance in trust and have a professional trustee manage it.
- Lawsuits don’t die. If there’s a lawsuit underway at your death, your estate will have to continue your defense. How to fix? Inheritances left in trust are generally not reachable by creditors of the beneficiary. That might have made the lawsuit less likely to begin with.
- Choose back ups. Bing’s estate is in limbo because his named an executor died before he did. How to fix? Name at least one back-up, maybe more if those named are older or the same age as you are. Or, even better, name a professional fiduciary who has a succession plan. (Family members are often not the best choices.)
- If you have a trust plan, fund it. Trusts and other entities avoid probate if properly funded and coordinated. The fact that Bing’s probate estate has assets means something wasn’t right. A proceeding likely would be needed for the lawsuit, but that should be it. How to fix? Review your assets and consider what happens to them when you die. If you want to avoid probate, make sure each goes to your trust or other non-probate destination.
- Trusts only promote privacy to a point. Privacy is a benefit of having a trust because no documents are filed with a court and become public. But if anyone starts fighting, the plan can become public. How to fix? Build in flexibility and authority with a trust protector or mandatory mediation. Consider confronting issues when your plan can still be changed, and hope for some luck.
- No inheritance can ever guarantee success or happiness. And that’s something that can never be fixed.