March 14, 2012
Authored by: Tiffany McKenzie and Kim Civins
A recent Forbes.com article speculates that Whitney Houston’s estate will be worth anywhere between $10 and $20 million, or more. However, throughout her career, Houston has signed $100 million record deals and $10 million movie contracts for her roles in Blockbuster hits such as “The Bodyguard” and “The Preacher’s Wife.” Houston also completed the filming of “Sparkle” which is scheduled to be released in September of this year. Surely, with sound marketing, branding of Houston’s image, and increased record sales, her estate can bring in millions more in the upcoming years. Zach Greenburg, Forbes writer, said although Whitney Houston may not match Michael Jackson’s postmortem earnings, her artist royalties alone could bring the estate more than $10 million in the next year. Here’s an ABC News Article that discusses her estate’s earning potential in more depth.
On Wednesday March 7, 2012, the Fulton County Probate Court in Georgia approved Houston’s Will, signed in 1993. It revealed that Houston left all her wealth, as well as all furnishings, clothing, personal effects, jewelry, and cars, in trust for her only child, 18-year old Bobbi Kristina. At Bobbi Kristina’s death, if she dies before final distribution to her at age 30, the Will provides that all such assets will be paid in equal shares to Whitney Houston’s mother, Emily Cissy Houston, her father, John R. Houston, her husband, Robert (“Bobby”) Brown, and in trust to her brothers, Michael Houston and Gary Houston. Because Houston and Bobby Brown divorced in 2006, he is deemed to have predeceased her and thus will not take under the Will.
With most people, especially high wealth individuals, such as Whitney Houston, it is recommended that clients have more than just a simple will. The Forbes’ article demonstrates how Whitney Houston’s passing provides a perfect example of why, for a large majority of people, a will is not enough. Under a simple will, any assets left to Bobbi Kristina would be inherited outright and all at once. Under such a scenario, issues may arise because Bobbi Kristina is only 18 years old and her level of maturity and sophistication may not be sufficient to responsibly handle the receipt of millions of dollars outright. In these types of cases, family members (such as Houston’s ex-husband Bobby Brown) can challenge Bobbi Kristina’s competency by petitioning a court to be appointed conservator over Bobbi Kristina to gain managerial control over her finances. Fortunately, Houston’s Will contained a trust for Bobbi Kristina to avoid such a result.
If Houston had prepared a revocable trust (with a basic “pour-over” will), most of her affairs could have been handled privately and outside of the court system. The trust could also include provisions that would not allow minors and young adults, like Bobbi Kristina, to receive assets until they reach a certain age. Moreover, trusts can be used to reduce estate taxes and protect your assets from creditors or other claimants. Here’s a Wall Street Journal Article that discusses the benefits of trusts in more depth.
There is a lesson to be taught from Whitney Houston’s passing: death may be unpredictable and pre-mortem planning is important. Having just a simple will may not be enough. Estate planning with mechanisms such as trusts may be the best way to care for your wealth, property and family at death.
See Danielle and Andy Mayoras, Whitney Houston’s Funeral Shows Trouble Already Brewing Around Her Estate, Forbes, Feb. 20, 2012.