The recent tragic death of celebrity chef Anthony Bourdain was followed by a number of news stories that have become commonplace in this day and age of internet “reporting” on celebrities ─ stories about the celebrity’s net worth based on documents filed in the probate court and not thoroughly researched. In Mr. Bourdain’s case, the headlines noted that the chef, whose net worth was recently estimated to be over $15 million, was only worth $1.2 million when he died.
This $1.2 million number is based on documents filed with the probate court in New York.This number may not represent the total value of Mr. Bourdain’s assets on his date of death; rather, it represents only those assets which are passing under his last will in New York, most of which go to his young daughter. It is possible there may be probates filed in other states. In the event Mr. Bourdain owned real estate outside of New York, the executor may have to file multiple probates. Many families are unpleasantly surprised when they realize they need to file an out-of-state probate (and/or pay out-of-state estate taxes) for decedents who own properties in multiple states. This sort of costly inconvenience can often be avoided with the right planning.
Looking outside of the probate filing(s), there are lots of other ways in which assets transfer at death. The most common form of non-probate asset transfer at death is jointly held assets between spouses. These transfers occur as a result of the language of the deed on record with the county recorder, not with the language under a person’s will. Joint financial accounts transfer in the same manner ─ outside of the probate court as a result of local laws and the language in the account agreement. Mr. Bourdain was unmarried at his death, so it is unlikely there were jointly held assets in his case.
Beneficiary designations are another effective way to transfer assets outside of the probate court. IRA (Individual Retirement Account) beneficiaries, life insurance beneficiaries, and individuals named under a “transfer on death” to “T.O.D.” designation each receive their assets via paperwork filed with the financial provider or county, rather than the filing of a will with the court. If Mr. Bourdain ever contributed to an IRA or workplace retirement plan, set up any sort of personal IRA, bought an annuity, or added a T.O.D. designation to his bank accounts or real estate (in some states) ─ none of this would be represented in the $1.2 million being reported.
Mr. Bourdain may have transferred assets outside of the probate courts via the use of a trust or trusts. It is not uncommon for wealthy individuals to establish living trusts in order to avoid the publicity of a probate filing and a public listing of all assets when they die. If Mr. Bourdain had a living trust, then the $1.2 million only represents the amount that he did not transfer to the trust during his lifetime. If he transferred assets to such a trust during his lifetime, the world may never know.
Finally, if Mr. Bourdain was worth $15 million at some point, he may have established irrevocable trusts to plan for the estate taxes due at his death. Irrevocable trusts are administered privately, just like revocable ones.
The bottom line is that we’ll likely never know exactly what sort of planning was done prior to someone’s death, celebrity or otherwise. What we will know is what assets passed under their wills and to whom these assets transferred. If avoiding this sort of publicity is important to you, you ought to talk the issue over with your estate planning attorney. If you’d like help organizing your assets and your plan prior to meeting with your lawyer, give our planning team a call.