The publicity surrounding the debacle of Anna Nicole Smith’s estate highlights the importance of careful estate planning, according to financial advisers, but the errors she made are quite common and are easily remedied.
CHICAGO — The publicity surrounding the debacle of Anna Nicole Smith’s estate highlights the importance of careful estate planning, according to financial advisers, but the errors she made are quite common and are easily remedied.
Since the celebrity’s death at age 39 in February, advisers said, they have seen an increase in the number of clients calling with questions about will preparation.
It is common for clients to ignore estate-planning issues, and a case such as Ms. Smith’s gives advisers an opportunity to encourage their clients to take the appropriate steps, said Charlie Douglas, an attorney and certified financial planner at Strategic Stewardship Inc. in Atlanta.
“It’s a hot area, because this is a way for me to add value and differentiate myself and to help people,” he said. “I think if you can add value through an emotional connection by helping people plan around issues that are more than just money, you’ve got a client for life.”
Advisers who said they haven’t seen an increase in calls regarding wills intend to use this case to help prevent their clients from making the same mistakes that Ms. Smith did.
Although advisers don’t draft wills, it is incumbent upon them to make sure that their clients’ wills are updated regularly, particularly when a life-changing event occurs, advisers said.
Contingent heirs
“The best advisers, at the top of their game, who are truly professional, are dedicated to doing the right thing for their client,” said Ruth L. Forehand, a CFP and vice president of wealth management at Financial Advisory Consultants LLC in Naples, Fla. “That should not be confused with someone who doesn’t have credentials and is working on a transactional basis.”
Ms. Forehand said that Ms. Smith’s will could have been fixed easily had the former Playboy playmate updated it to include her daughter, Dannielynn, now seven months old. Ms. Smith’s will named her son, Daniel Wayne Smith, as the sole heir, but he died last September.
Surprisingly, her will stated that she “intentionally omitted to provide for my spouse and other heirs, including future spouses and children.”
That provision shocked many attorneys and advisers.
“What person would have ever excluded children born after the fact?” said Gary L. Flotron, president of the National Association of Estate Planners and Councils in Cleveland. “That’s so stupid.”
Clients should always include contingent heirs, said F. John Deyeso, a CFP with financial filosophy, a New York firm.
Emotional issue
Advisers said that it is more difficult to get younger clients to plan their estates, said James W. Zeberlein Jr., a CFP with Z Financial Planning LLC in Salt Lake City.
“It’s so emotional, primarily for younger folks. It’s not as difficult for older folks, because they’ve had friends and family die, and have seen fights in those families,” Mr. Zeberlein said.
“This kind of news can only help people, and young people really need to start looking at estate planning seriously,” said Michael Sandberg, senior vice president of Newbridge Financial Services Group Inc. in Fort Lauderdale, Fla.
Even affluent clients and high-net-worth business clients often don’t do proper estate planning, according to Stacy Francis, a financial adviser with Francis Financial Inc. in New York.
“You would think that affluent clients would know the importance of having their will in order,” she said. “People don’t want to face the fact that they’ll die, but that’s the one thing we know will happen.”
While it was determined that photographer Larry Birkhead is Dannielynn’s father, many other issues remain, including who will inherit Ms. Smith’s estate and what will be the outcome of her decade-long legal battle against the family of her late husband, J. Howard Marshall, for up to $500 million from his estate. Mr. Marshall died at age 90 in 1995.
At a hearing Friday, a resolution was apparently reached regarding Dannielynn’s custody. Ms. Smith’s estranged mother, Virgie Arthur, was fighting for guranteed visitation rights.
Mr. Birkhead said he couldn’t disclose what happened, but said he had a good day in court.
Advisers said that a custody battle could have been avoided had Ms. Smith indicated her wishes in her will.
Ironically, her estate may not be worth much — probably as little as $100,000 and no more than $1 million, according to Horace Cooper, an assistant professor of law at George Mason University in Fairfax, Va. Ms. Smith filed for bankruptcy in 2000 and had borrowed money, based on the expectation that she would receive her inheritance from Mr. Marshall’s estate, Mr. Cooper noted.
“People were accepting promises [that she’d receive the inheritance] in exchange for giving her goods and services,” Mr. Cooper said.
It is possible that Dannielynn will lose more of her mother’s estate to court costs, he said.
“This child will have to sue on her own behalf to get her mother’s estate,” Mr. Cooper said, adding that Dannielynn could end up in debt if she doesn’t win money from Mr. Marshall’s estate and if Ms. Smith’s attorneys continue to borrow money.
