October 19, 2021
What Larry King Can Teach Us About Estate Planning
Celebrity deaths often highlight what not to do in the field of estate planning. James Brown and Prince famously died without wills. Fifteen years later, Brown’s estate is still in litigation. Three years later, Prince’s estate is in the middle of an aggressive estate tax audit. Recently, we learned that prior to his death, Larry King handwrote a will. Ironically, Mr. King was likely successful in meeting the bare minimum standards under the law for an enforceable will. However, he was also likely successful in plunging his family into years of litigation and heartache. Let us explain why.
By all accounts, Mr. King had an established estate plan in 2019. However, following the initiation of divorce proceedings and a stroke, he handwrote a will which is short enough to state here in its entirety:
This is my Last Will & Testament. It should replace all previous writings. In the event of my death, any day after the above date I want 100% of my funds to be divided equally among my children Andy, Chaia, Larry Jr Chance & Cannon.
There are several material details we do not know. First, what pre or post-nuptial agreements were in existence requiring testamentary gifts by Mr. King? Second, what trusts were in existence directing some or all of his assets at death, regardless of the language of the will? Third, what type of titling, beneficiary or Pay on Death (“POD”) statuses, or buy-sells were in place for his real property, financial accounts and closely held business interests? Finally, what type of California community property rights did his wife retain since Mr. King passed while separated, but not yet legally divorced? Any one of these questions could have a drastic impact on the disposition of Mr. King’s Estate.
Assuming for a moment that none of those details materially impact his estate, what exact legal issues are presented by the handwritten will? First, there is the basic question of enforceability. Unlike California, Georgia requires all wills to be witnessed by two qualified individuals, even if the will is entirely handwritten. So, absent invalidity on some other grounds (eg: testamentary capacity, undue influence, fraud, etc.), Mr. King’s handwritten will likely meets the formality requirements to be admitted to probate in Georgia. However, admittance to probate is where the problems begin. The two largest issues created by his will are Mr. King’s failure to appoint an Executor and use of the word “funds” in the only sentence actually disposing of assets. As a result, in addition to the likely challenges to the Will on capacity grounds, there will be a legal battle as to both the appointment of the Executor and whether Mr. King intended to dispose of the entirety of his Estate or just cash or cash like assets. You would not typically expect real property, personal property, royalty rights or closely held business interests to be encompassed by the term “funds.” If Mr. King’s words do not adequately dispose of his assets, a dispute would follow over whether his attempted revocation of previous wills was effective or whether a partial intestacy results and the laws of the state are employed to distribute his estate.
Mr. King’s circumstances are unfortunately not unique. The legal pitfalls surrounding divorce and estate planning are abundant. While there is protection for individuals failing to change their will after the entry of a final divorce decree (in Georgia the former spouse is treated as if he or she had predeceased the testator), there is no such protection for those passing away during divorce proceedings. Because he lived in a community property state, Mr. King would have also faced unique challenges in disinheriting his spouse prior to their formal divorce. Interestingly, Georgia is the only state in the country that would have permitted Mr. King to effectively disinherit his spouse in a will.
Even more challenging to account for are non-probate assets (ie., life insurance, retirement accounts, joint financial accounts, etc.). Georgia law does not automatically void the designation of an ex-spouse as the beneficiary of a life insurance policy in the event of a divorce. Similarly, divorce does not automatically void the designation of an ex-spouse as the recipient of an employee's retirement plan benefits nor does a property settlement ordered in conjunction with a divorce automatically allow the ex-spouse access to the employee's retirement benefits. Even prior to divorce (with the potential exception of marriages of less than one year), beneficiary designations on retirement accounts can only be changed by the owner of the account and in conformance with the rules that are set out by the plan sponsor. With regard to 401ks, federal laws actually require spousal consent in writing before removing a spousal beneficiary.
For those with a variety of probate and non-probate assets, estate planning can already feel like a complex task. Introducing divorce into the picture can certainly complicate and endanger the plans we all have for taking care of our families at our deaths. A competent team of domestic and estate planning attorneys, often working in tandem, is necessary to ensure you arrive on the other end with your property and plans intact. Fortunately, you do not have to be famous or rich to achieve this outcome.