Lamar Odom's medical debacle offers lessons on estate planning

Former NBA star's soon-to-be ex-wife still has power over health-care decisions

Oct 19, 2015 @ 1:30 pm

By Greg Iacurci

Former basketball star Lamar Odom's health may be turning a corner following a recent episode that rendered him comatose, but there are still important lessons for financial advisers about the importance of regularly monitoring and updating clients' estate planning documents.

Mr. Odom, a 35-year-old athlete and two-time National Basketball Association champion during his tenure with the Los Angeles Lakers, was found unresponsive after collapsing in a Nevada brothel last week and was duly hospitalized in Las Vegas.

However, it emerged that Mr. Odom's estranged spouse, reality television star Khlo Kardashian, had legal authority to make medical decisions on his behalf. The couple wed in 2009 and signed divorce papers in July, but they haven't been finalized due to a backlog in the Los Angeles court. This means Mr. Odom and Ms. Kardashian are still legally married.

Advisers point out that, although Mr. Odom's situation seems to be improving, his estate-planning blunder is one that could have been easily avoided by having proactively updated important documents once he knew of his impending divorce.

“A divorce is one of those situations where you top-to-bottom are making sure you're looking at everything — decision-making, who's a beneficiary on different accounts, what kind of joint ownership situations are there. All those things have to be addressed and revisited,” said Thomas West, financial adviser at Signature Estate & Investment Advisors.

If Mr. Odom had been legally divorced, Ms. Kardashian's power to execute medical decision-making would have been revoked under California law, and the power would have transferred to “successor agents” such as children or friends, according to Charlie Douglas, a financial adviser and editor of the Journal of Estate and Tax Planning. That would have been the case under laws in most states, Mr. Douglas said.

Another basketball bigwig, Donald Sterling, also found himself in hot water last year due to an ill-calibrated estate plan. That resulted in the eventual $2 billion sale of the professional basketball franchise he owned, the Los Angeles Clippers , by his estranged wife, which was against his wishes.

In situations like Mr. Odom's, an updated power of attorney for health care — which comes into play for those who are incapacitated and unable to make a decision for themselves — would ensure someone other than an estranged spouse could make medical decisions on a client's behalf. A health-care power of attorney is one of two types; the second governs financial assets.

In California, for example, the health-care power of attorney incorporates a living will, which states people's wishes for end-of-life medical care. But that's not necessarily the case under all state law.

“That's why it's important to check: Do I just need a health-care power directive [or a living will as well],” Mr. Douglas said.

Having accurate documentation in order also takes a tremendous amount of pressure off the client's family, Mr. Douglas said. Situations may arise in which family members are divided over a proper course of action with respect to a medical procedure, so having a power of attorney prevents that sort of infighting, he said.

Mr. West revisits baseline assumptions underlying a client's investment policy statement — which could be impacted by circumstances such as job change and divorce — once every year or two. During those consultations, he asks the same “fact-finding questions” — in the same way a doctor repeats the same questions about physical health from visit to visit — to glean anything that could change the role of money in a client's life.

“Clients don't necessarily know to raise their hand when there's a change in circumstances,” Mr. West said.

0
Comments

What do you think?

View comments

Upcoming event

Sep 10

Conference

Denver Women Adviser Summit

The InvestmentNews Women Adviser Summit, a one-day workshop now held in six cities due to popular demand, is uniquely designed for the sophisticated female adviser who wants to take her personal and professional self to the next level.... Learn more

Most watched

Events

Finding your edge from Tony Robbins

Guru Tony Robbins has helped a lot of people, but armed with his psychology Financial Advisor Josh Nelson has helped his practice soar.

Events

Finding innovation in your firm

Adam Holt of AssetMap explains how advisers understand they need to grow, but great innovation may be lurking right under your nose.

Latest news & opinion

How to battle sequence-of-returns risk

Retiring during the longest-running bull market in history can be scary, as some begin to wonder when the good times will end.

Tony Robbins loses role with RIA amid charges of sexual misconduct

String of allegations costs the self-help guru his gig as chief of investor psychology at Creative Planning.

SEC sets June 5 date for vote on Regulation Best Interest

Commission adds new item to agenda: Interpretation of broker guidance that qualifies as advice

House passes SECURE retirement bill with massive bipartisan support

The measure allows small employers to band together to offer plans and raises the RMD age. Another provision eases use of annuities in 401(k)s, which critics say goes too far

10 IBDs with the most annuity revenue

Here are the independent broker-dealers that brought in the most annuity revenue last year.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print