The sudden passing of NBA legend Kobe Bryant on January 26, 2020 created an estate estimated at over $600 million. Kobe was survived by his wife, Vanessa Bryant, and four daughters, including his youngest daughter, Capri Bryant, who was born after Kobe revised the Kobe Bryant Trust (“Kobe’s Trust”). On March 17, 2020, Vanessa Bryant petitioned the Los Angeles County Probate Court to amend Kobe’s Trust to include Capri as a beneficiary. Kobe’s Trust had not been amended since 2017, shortly after the birth of Bryant’s third daughter, Bianka Bella Bryant.
It is common for a surviving spouse to petition a probate court to amend a trust, especially if a child was omitted from the trust unintentionally or the death of the grantor took place before a trust modification was finalized. However, modification of a trust is often complicated. For instance, the Florida Trust Code allows courts to modify a trust if the addition of a beneficiary is consistent with the material purpose of the trust. See Fla. Stat. §736.04113.
Updating a trust after the birth of a child is often not feasible or practical. Vanessa Bryant’s present dilemma could have been avoided if Kobe included a catch-all provision in Kobe’s Trust that provided for children born after Kobe’s Trust was created to be included as beneficiaries.
Celebrities are often assumed to be immune from estate planning mishaps. On the contrary, the family of late actor Philip Seymour-Hoffman experienced an issue that was comparable to the issue arising from Kobe’s Trust. Mr. Hoffman had three children but he passed away before his will was amended to include his two youngest children. Mr. Hoffman’s will provided that all of his assets were to be distributed to his longtime domestic partner, Marianne O’Donnell, who was the mother of his three children. Under New York law, each “after-born” child was entitled to receive an equal share to that of the children born prior to the execution of a will, essentially protecting children from unintentional disinheritance. See N.Y. CLS § 5-3.2; see also, Fla. Stat. § 732.302 (Pretermitted Children). By including an after-born child provision, costly litigation may be avoided.
Another important issue that should be addressed during the estate planning process is the age or ages in which your children receive the funds from an estate or trust. Many young individuals are not fiscally responsible or savvy. If a trust beneficiary receives a large amount of money at a young age, the likelihood that the beneficiary will squander the funds is high. Trusts often vest in tranches, meaning that beneficiaries receive a certain percentage or dollar amount upon attaining specified ages. In addition, trusts can be created for the lifetime of beneficiaries thereby creating intergenerational wealth. When creating trusts, income, estate and generation skipping transfer tax considerations must be carefully evaluated.
A trust is a powerful tool to utilize in estate planning to protect assets and distribute property after a person passes away. Properly drafted trusts allow individuals to maintain control over assets after passing away, while potentially avoiding estate and inheritance taxes (depending on the type of trust) and providing for minors, children with disabilities and incapacitated individuals.
For assistance in creating an estate plan, please contact Michael Salad via e-mail at firstname.lastname@example.org or direct dial at (954) 889-1850 or Craig Panholzer via e-mail at email@example.com or direct dial at (954) 889-1856.
Michael Salad is a partner in Cooper Levenson’s Business & Tax and Cyber Risk Management practice groups. He concentrates his practice on estate planning, business transactions, mergers and acquisitions, tax matters and cyber risk management. Michael holds an LL.M. in Estate Planning and Elder Law. Michael is licensed to practice law in New Jersey, Florida, New York, Pennsylvania, Maryland and the District of Columbia.
Craig Panholzer is an associate in Cooper Levenson’s Business & Tax practice group in its Florida office. He concentrates his practice on business transactions, bankruptcy, estate planning, probate, and tax matters.
*Trevor Waldron is a summer associate in Cooper Levenson’s Atlantic City, New Jersey office.