Hollywood cases provide teachable moments in estate planning

Director John Singleton and former Yahoo CEO Terry Semel were very different Hollywood animals, but both made common but critical errors in their estate and life planning that caused problems for their families and, in the case of Semel, himself.

John Singleton's children are entering a legal battle over their father's estate, claiming that his will is outdated. Singleton signed his will in 1993, when he had only one child. When John died on April 28 at the age of 51, he was survived by seven children, six of whom were unaccounted for in his will. Now instead of focusing on grieving his loss, his children have retained lawyers and are focused on securing their respective shares of the estate, which reportedly is worth $35 million.

So, where did Singleton go wrong?

Singleton should have updated his estate plan. As a general rule of thumb, you should update your estate plan after any significant life event -- e.g., the birth of a child, adoption of a child, death of a child, marriage, divorce, death of a spouse, other substantial change in life or financial circumstances, etc. If you fail to update your estate plan, you are going to leave behind some very frustrated and confused family members who are going to question how you could leave something so important unattended to.

As a trust and estates attorney who has handled thousands of cases, I've seen many successful people make similar mistakes with their estate planning. Singleton is just the most recent examples of high-profile persons who have made these same mistakes. Another recent example is Prince, who died intestate -- i.e., without any estate plan -- and whose estate currently is being probated in Minnesota. Both certainly had the resources and cadre of advisors to fully plan out his will, but these things are commonly overlooked, and celebrities are no exception, despite their resources.

Now that Singleton has passed and his will appears valid and subject to probate, his children born after the will was executed should take their interstate shares as omitted heirs, assuming no other documents surface, as often happens in these cases. This case is far from over, but it could have been avoided entirely if Singleton had updated his estate plan.

Earlier this month, the Los Angeles Times summarized the mayhem that broke out when Eric Semel, son of the former Warner Bros chairman Terry Semel (who has Alzheimer's disease), petitioned to be temporary conservator of his father's estate. The younger Semel wrote that his stepmother undermined his father's wishes and best interests by moving him to a nursing home. The manner in which his stepmother had been caring for Semel was "causing serious harm to Terry's health and safety, potentially rising to elder abuse and neglect," the son claimed.

How did one of the wealthiest and most powerful men in Hollywood end up allegedly uncared for in a compact two-room unit in a nursing home?

The Semel story is all too common. One need not look back too far to find similar stories concerning Sumner Redstone, Casey Casum, Stan Lee or Mickey Rooney. Yet these stories rarely receive the type of attention they deserve, and when they do they are too-soon-forgotten. With our aging population, these cases are only going to become even more common. People facing Alzheimer's and other dementia diagnoses or mental or physical frailties can best protect themselves (and their families) by installing a team of trusted advisors -- rather than a single person -- to manage their affairs according to a well-documented care plan, should the need ultimately arise.

This "board of directors" approach comes with costs, obviously, but protects against the rogue family member or friend wreaking havoc with a loved one's affairs. There are myriad options available, from building a "board of directors" of trusted advisors to utilizing private professional fiduciaries who are licensed, bonded, and trained in such matters, to hiring institutional fiduciaries who have teams of people able to handle various matters. A combination of these options may be appropriate depending on the circumstances.

The key takeaway is to admit your situation, and take steps to manage your personal affairs before you no longer have the ability to do so.