When estate planning gets Fast and Furious
March 1, 2021 | View PDF
If you like movies with car chases, then you know who Paul Walker was. During the past 20 years, the Fast & Furious movies — I think there were nine in all — were your visual feast for car races, chases and crashes.
And Paul Walker, a good-looking and talented actor who was himself a car aficionado, was the star of the first seven of those films. Until he died at the age of 40.
Walker died in a fiery car crash, in a Porsche being driven by a friend at a speed somewhere in excess of 80 miles an hour. In a way, it was a fitting end for someone who, in the public mind, was associated with fast cars.
Of course it would not have seemed fitting at all to his grieving family. Paul Walker had a daughter, 15 years old at the time. She was his only child, and he was single, although he did have a longtime girlfriend. He had a will in place, which poured everything over into a living trust for the benefit of his daughter. So far, so good (unless you happen to be the girlfriend).
But not so fast, if you’ll pardon the phrase.
Walker created his will and trust in 2001. At the time he was a 28-year-old, promising but not yet successful actor, who had had a few movie roles but nothing big. His daughter was two years old. We don’t know how much he was worth at that point, but I am willing to bet it wasn’t very much. By the time he died at age 40, his estate was worth at least $25 million.
What are the terms of his trust? We don’t know. That is one of the advantages of a living trust. The only reason we even know how much his estate is worth, is that he skipped one step in the process, by never funding the trust. The term “funding the trust” means titling your assets out of your own name and into the trust’s name while you are alive. But his assets were still in his own name. In order for his assets to get into the trust, then, they had to first go through probate, which is a public process. But once the money was paid over to his living trust, the public record fades to black.
We can make some guesses about what the terms might have been, though, because people with modest estates typically leave the money to their children, outright, at a certain age. That makes sense, because the longer money is held in trust, and the more the trustees have to do, the more the administrative expenses eat up the money in the trust. For people with large estates, like Paul Walker had by the time he died, the administrative expenses add up to a pretty small percentage of their estates, and it may be worth having professional money managers dole out the money cautiously over a long period of time.
But for people with modest estates — say, $1 million or less — those administrative costs could be a substantial percentage of the estate. So for people like the young 28-year-old Paul Walker, it might have made more sense to direct that at some particular age, perhaps on his daughter’s 21st birthday, she would get whatever remains, outright and free of trust.
Question: what would you have done with your life, had you inherited $25 million on your 21st birthday? If that had happened to me, I suspect the stock price of Anheuser-Busch might have gone up.
On the other hand, we don’t actually know that Walker didn’t update his estate plan. All we know for sure is that he didn’t update his will. But this was a simple pour-over will, directing that everything was to go into the trust. It is possible he might have updated his trust over the years. The only reason to update the will would be if he was changing the executor. He might have kept the same executor, but amended his trust to change the terms of when and how his daughter would get the money. If he had, because of the privacy inherent in a living trust, we would not know that.
By all accounts Paul Walker was a dedicated and loving father, and I would like to think that he would have updated his trust. Unfortunately, I have seen many otherwise dedicated parents who didn’t update their estate plans when circumstances changed.
To put it another way: hopefully he changed gears.
Kenneth Kirk is an Anchorage estate planning lawyer. Nothing in this article should be taken as legal advice for a specific situation; for specific advice you should consult a professional who can take all the facts into account, and do it ‘Slow & Deliberate’ instead of … you know.