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There are plenty of LESSONS FROM GENE HACKMAN’S ESTATE PLANNING.

It’s a cautionary tale about managing changing circumstances. Proper implementation and monitoring has to be in place. Periodic reviews of the documents, asset titling, and staffing of the fiduciary roles are a must. Finally, understanding the family dynamics and desire for confidentiality are vital in putting the estate plan in place. The disposition of $80 million was at stake here.

LAWRENCE D MANDELKER, Partner at the NEW YORK OFFICE OF VENABLE, and I discussed the fact pattern, what could have been avoided, and points to take away in one’s own affairs.

Transcription

Frazer Rice (00:02)
Welcome aboard, Larry. VENABLE ARTICLE ON GENE HACKMAN’S ESTATE

Lawrence D. Mandelker (00:04)
Thanks for having me, Frazer.

Frazer Rice (00:05)
This is, I wouldn’t say it’s fun talking about someone’s estate, but this one’s particularly interesting. We all remember Gene Hackman from Hoosiers and Superman and Mississippi Burning and all sorts of great movies. Unfortunately, his end was sad and as it turns out, Gene Hackman’s Estate was complicated and public. From a planning perspective, we can learn a lot. ⁓ Take us through a little bit about where where Gene’s estate kind of went from and ended up as far as a fact pattern.

Fact Pattern in Gene Hackman’s Estate Planning

Lawrence D. Mandelker (00:37)
Sure. So, you know, the news sort of surprised all of us when we heard that he had died. And then over the next couple of days and weeks and even months, more more detail came out. And as you said, it was pretty disturbing. But it seems as though Gene Hackman was a very successful ⁓ actor and he engaged in estate planning.

Gene worked with attorneys, which is always a good thing to do it to work with people who are experts in the field And he had a you know a normal estate plan. He lived with his wife It seems like he had a little bit of a fractured family. It was not his first marriage. We learned after he signed his estate planning documents sort of things over the next 20 years sort of changed for him he He had some health issues.

He was suffering from advanced dementia at the time he died and as we know his wife died from a virus apparently a week before. Then as the details came out we learned that he had the advanced dementia. There was a fractured family the the wife and his kids did not get along so well. It’s unclear what the situation was with how much contact he did have with his children. But he had a will, he had signed it 20 years before he died. The facts changed. It looks like he hadn’t reviewed it in a while. His attorney died so we have a sad situation here.

Frazer Rice (02:12)
Many lessons to get from that. Let’s start with the first one. He definitely had ⁓ sort of dementia situations, cognitive dysfunction that eroded over the course of time. Maybe take us through a little bit about the scope of that issue. mean, it affects lots of people and a growing number every year and some things that should be in place because of that.

Lawrence D. Mandelker (02:38)
Yeah, you know, we all think we’ve got a lot of time and for someone who gets a diagnosis of dementia

It’s sort of a warning sign as soon as that happens that, you know, we never know when our time is going to come, but the dementia is sort of the warning. You know, maybe you’re entering the second half of the game or the fourth quarter of the game. So maybe you should start getting your affairs in order while you still can. So it’s a good ⁓ impetus to do that. You know, when we’re looking at estate planning, there’s, you you can do different types of estate planning, but really think about it as, you know, you can do it for yourself.

You can do it- your loved ones and then you know for depending on the nature of your assets you can do it for tax purposes but you know getting the the warning that you have dementia doesn’t mean that you can’t sign a will doesn’t mean you can’t do any estate planning it just means that you know you’re probably heading towards a situation where you are going to face you know a number of years during your life where you can’t make the same decisions on a daily basis for your own benefit that you can today.

And going back to that idea of the first level of estate planning is for yourself. So you want to make sure that you’ve put in place a plan of who’s going to make decisions for you when you can’t make those decisions, rather than having those people fighting amongst themselves to decide who’s going to do it. You’re empowered to do it yourself.

Standard Documents

Frazer Rice (04:08)
Well, and it goes to goes so far as to reiterate the notion that you should review these things periodically. The idea of making decisions around health care, making decisions around financial ⁓ situations. We’re dealing with a sizable estate and to have that in a confused state, you know, someone’s health starts to decline. That’s a dangerous place to be.

Lawrence D. Mandelker (04:31)
Yeah, absolutely. mean, you’re at the very basic documents.

You want a healthcare proxy and a power of attorney. The healthcare proxy is going to name a healthcare agent to act for you to make your decisions when you can’t make them. And the power of attorney is going to name someone who can do anything that you can do by signing your name.

So they can sell your house, they can buy a house, they can take out a mortgage, they can buy stock, they can sign your tax return, they can pay your electricity bill. The people that you trust to do those important jobs may change over time. So when your kids are young and if you’ve got a teenage child, maybe you don’t trust them. But as they are in their 20s and 30s, and at that point when your kids are young, maybe you’re naming your siblings as these agents, or good friends, or trusted advisors, whether it’s your accountant or your attorney, people that you’ve known for a while whose judgment you trust.

But then when your children get older, that changes a little bit. Maybe now you start trusting your kids to do that. Your advisor is no longer working or you’ve moved on a different advisor. Maybe your siblings have their own health problems so they’re not able to do it. So it always changes and it’s always something that you don’t need to look at the documents every day. And I sort of tell my clients, know, keep the documents someplace where they will be found but not where you see them every day. ⁓

Frazer Rice (05:57)
Well, the backup to that is don’t leave it in a safety deposit box at a bank where necessarily the bank may have trouble getting to it if you don’t have those documents in place or they are in the vault.

Lawrence D. Mandelker (06:12)
Yeah, you know, that’s the thing that’s one of the first things you learn out of law school as a trust and estates attorney that you you need a court order to open in New York, at least you need a court order to open up a safe deposit box after someone died. So if the will is in there, you you’ve increased your complexity, you’ve increased your costs, you’ve increased your time just to get the will.

Implementation

Frazer Rice (06:32)
So let’s get back to the important notion of implementation and then the close cousin to that monitoring the estate plan as it goes forward. A lot of what’s going on in the Gene Hackman estate is going to be related to titling of assets and making sure that they are in the different entities that were set up, making sure the designations are in place, and then understanding that that is where that it follows the intent of Gene going forward. What do we learn on that from what we had here.

Lawrence D. Mandelker (07:04)
Sure, know, a lot of our clients come in, they sign the documents, and they think, wait a minute, I’m done, right? And, you know, sort of there’s a next step.

You want to make sure that you’ve implemented your plan. So that means you know if you have a revocable trust because you want to avoid probate Well, the assets have to be in the revocable trust You actually have to retitle your assets if you want to update your beneficiary Designations on your retirement accounts or on life insurance policies.

It’s not enough to just say you want to do it. You have to actually fill out the forms. You have to send them in. Practice pointer: you should follow up with the insurance company and get written confirmation that you’ve done it correctly. If you name three children and they only put down two, then they’re only going to pay it to two kids. You want to always check and recheck to confirm that everything that you’ve done.

Frazer Rice (07:58)
This was a case where sort of the way of going about it, where they “set it and forget it.” It really hurt things going forward.

Lawrence D. Mandelker (08:06)
Yeah, he signed his will and he didn’t review it, it seems like, for quite some time. So he named as a fiduciary, he names his attorney. And meanwhile, his attorney ⁓ predeceased him.

We don’t know if that was because maybe he lacked capacity to change those documents at the time the attorney predeceased or he just didn’t look at it. But in any event, if the attorney’s getting older or something’s happening, you you should know, you should constantly monitor.

If these are the people that you’re counting on to take care of you, then you want to make sure that they’re in a good position to do that.

Frazer Rice (08:42)
I tell people that it’s a good idea to have the people who staff the different roles in your estate plan be, as a rule of thumb, 10 years younger than you are. Maybe more, just so that you don’t have these types of issues.

Lawrence D. Mandelker (08:57)
Yeah, no, that’s a good rule of thumb. You usually don’t want someone older in the event that you really have nobody else. Or you have a small family or you don’t trust someone. Maybe the family dynamics is really shifting drastically. Then sometimes you’ll just name, maybe add an extra person in the hopes that, well, this person probably won’t act, but if something, you know, happens to me, you know, something surprising happens to me, then at least someone’s there to be able to name someone else to act. So yeah, naming younger people, naming more people is backups that’s always important.

Frazer Rice (09:33)
Well, and that was an unintended good thing that happened in this estate plan. It sounds like he had a second successor in place because the circumstances around the joint death were a little peculiar. So having someone else in place has helped a little bit in this situation.

Lawrence D. Mandelker (09:49)
Yeah, absolutely. It’s that second successor. So it’s not only your primary agent and a successor, but sometimes having that other successor. It’s contingencies. I we’re always worried about, you know, the fact when we draft documents, we always in part of our plan, try to figure out, OK, well, what happens in the family disaster situation? Right. You all you’re all on the plane going down to Disney World for a big family reunion and the plane goes down. Who, you know, who outside of the immediate family do you want to get the documents? But we’ve got it. We’ve got a plan for all contingencies.

Confidentiality

Frazer Rice (10:20)
One of the things that’s sad about Gene Hackman’s Estate is that it’s being played out in the public. hear about estate planning in People Magazine is not exactly something we expect. But the fact of the matter is that this is sort of played out publicly when in many cases I’m sure that Gene didn’t intend for that to happen. Maybe talk a little bit about the privacy and the confidentiality issues that are at play here.

Lawrence D. Mandelker (10:43)
Sure, so your will is your will and it’s just a document until it actually gets probated, which means the court goes in and stamps it as being an official document. But for that process to happen, you have to go to court, you have to file the will in court, and that means it becomes part of the public record.

And whenever there’s a celebrity death, sort of a week or two weeks afterwards, the will comes out. It’s always in a newspaper or magazine. I represent highly visible people, They don’t want that. That’s their personal issues. Gene Hackman lived a quiet life. I don’t think he wanted people to know what his relationship was with his family, et cetera- or how he wanted his estate distributed.

Now, one thing that he did do was he used a revocable trust. A revocable trust is also sometimes referred to as a will substitute. That does not get probated. So that does not become part of the public record.

Where it says that his assets go into a revocable trust It doesn’t mean that it didn’t that he didn’t leave it for his kids or he didn’t leave it to charity.We just don’t know and, frankly, it’s none of our business.

No, you know, we don’t we don’t need to know how much money he had. or what he did with his money You don’t know what he spent it on on a daily basis. As someone who represents highly visible people athletes entertainers, they don’t want you know. They’ve got enough publicity. They want a little bit of privacy and we should all sort of give them that.

Frazer Rice (12:18)
No question. I imagine that’s why Gene kept a low profile, especially in the later stages of his life. He wanted to be remembered, I think, for his acting career and the legacy he left behind. Not the final years and the way he lived that.

Lawrence D. Mandelker (12:37)
Right, absolutely. ⁓ I wouldn’t want my neighbors to know what I’m doing with my money. I don’t deserve to know what they are. these people just have a, maybe it’s a cooler job and it’s a more visible job, ⁓ but give them that common amount of decency.

Hidden Traps in Gene Hackman’s Estate Planning

Frazer Rice (12:50)
Right. Regarding, Gene Hackman’s Estate, one of the things that ⁓ I think is a real cautionary tale here is that sometimes the boilerplate in these documents is particularly important and the circumstances of Gene and his wife’s demise have created a little bit of ⁓ sort of a walk into the gray area of how things should be applied here. Maybe take us through that. ⁓ This involves sort of the timing of death and how that applies to the implementation of these different vehicles.

Lawrence D. Mandelker (13:29)
Sure, so when we say boilerplate, we’re kind of talking about the general language and the will. So when you have a will, talk… you know, when your client tells you what they want to do and we’re drafting their will to reflect their wishes, there’s certain provisions that we’ll always have in that will, you know, provisions on how the will is going to be administered, what laws are going to apply, things like that, tax provisions. So, you know, that’s really what we talk about as far as boilerplate.

The problem is that that boilerplate sometimes is more important than the actual dispositive provisions of the will. Those provisions that say 50 % goes to my son and 50 % goes to my daughter. Depending on how it’s administered, the 50 % could turn into something very different. This is a perfect example of that.

Gene survived his wife. His wife died and then a week later he died. Her will said if Gene survives me, if he’s alive when I’m dead then he gets the money. It goes to him. Later on, it said if he doesn’t survive me, if he’s not alive when I die, then the money goes to charity.

The document said, well, if Gene doesn’t survive by 90 days then it’s treated as if he pre-deceased her. That little provision rewrites the whole will. It’s done for the reason to make sure that if jean wasn’t around, if we died in a common accident and maybe I died.

We died in a car accident and I died on Monday and he you know survived for three days in the hospital You know, he really didn’t have time to change it. He didn’t benefit from it So I don’t necessarily want it to go to him. I want it go to who would have gone anyway. If he didn’t survive, so that’s the purpose of that type of provision.

But really it turns things on its heads. And I really think that the lesson from this is, especially for the do it yourselfers out there who go online and they try to copy a will and type in their name and say, this is the provisions. You don’t know what’s hidden in the, for computing purposes, you don’t know what’s hidden in the code, right? You don’t know what else is in there and what changes those could have on the of the document and the plan.

Frazer Rice (15:57)
Well, and to put numbers around this, depending on how this gets sort of, sort of disseminated and understood, this could be $80 million going to the heirs or $80 million going to charity. And with some, you can understand that some people are going to have some questions about that going forward. If you aren’t clear about what the intent is in your documents and making sure that that’s understood in that language.

Lawrence D. Mandelker (16:28)
Yeah, like I said earlier, these little provisions that you tend to gloss over can really change the entire estate plan. This is a swing of $80 million. That’s going to be a huge difference.

The Dangers of DIY-Planning

Frazer Rice (16:43)
For the do it yourselfers, I’m going to reiterate it because I think it’s important. Getting an estate plan document by auto generation is going to cause some issues around this. People put things in place where they don’t understand how the levers get pulled. The directions that an estate plan can go will frustrate intent.

So this is my little sort of bromide: if you are using those documents, it’s a good idea to have them go through a lawyer as well so you understand how each of the clauses can impact these types of situations.

Lawrence D. Mandelker (17:27)
Yeah, I mean, you know, I sometimes say that if you’re being responsible enough to do estate planning. You’re thinking ahead, you want to plan, you want to empower yourself, you want to take matters into your own hands so you get to decide who gets things and how it’s going to be done, then you really should go the next step to do it. Otherwise, you’re really taking a big risk. I could get behind the wheel of my car and blindfold myself and start driving to the store and I may make it. It may work out perfectly, but it’s not necessarily a good idea to do it, even if it works out.

Frazer Rice (18:01)
Well, and to go back to the other parts of the Gene Hackman Estate fact pattern here, number one, intent can shift. And if you get into places where capacity or dementia start coming into place, it’s important to review these things. And secondarily, you can even have the will or the revocable trust say what you want it to say. But if you don’t have that titling and designation of beneficiaries and various things line up with the document, your intent can get distorted quickly.

Lawrence D. Mandelker (18:29)
Right, you know what you know, but you don’t know what you don’t know. And that’s dangerous part.

Frazer Rice (18:34)
We can look into the crystal ball for people and take care of a bunch of risks, but certainly not all of them.

Lawrence D. Mandelker (18:41)
Right.

I think you brought up a very good point just now and thank you for raising it. There are certain things that are done when you sign a will. They can help support the will in case of a later challenge, especially if you have incapacity.

So when you’re dealing with an attorney in some states like New York, for instance, where I’m located. When an attorney supervises the execution of the will, there’s a legal presumption that it was executed correctly. When you bring the will to court to probate the will, you have to prove that it was executed correctly.

If you had an attorney supervise it, you don’t have to do that. Someone looking to object to a will, to contest it, and say that’s not a valid will. You’ve made their job infinitely harder by having an attorney supervise the execution.

Frazer Rice (19:37)
People are discovering, for instance, Aretha Franklin’s estate has this issue. Someone found another will in a couch somewhere.Tthey’re going to litigate as to whether that’s valid or not. You can reduce the stress on the executor. The ultimate heirs and family members will thank you if you tie this up in a nice bow ahead of time.

Lawrence D. Mandelker (20:00)
Absolutely. There’s a lot of things that go into the will execution ceremony, the meeting where you sign your will. There are a lot of things that go into the whole process of your estate planning. You have to deal with correspondence, deal with discussions that you have with your attorney. This is true especially for people that are concerned about having a will contest. There could be concerns about dementia and people saying maybe they didn’t understand the will. Working with someone well versed in what they need to prove the will execution is extremely, extremely important. Can’t be said enough.

Final Points- Lessons Learned in Gene Hackman’s Estate Planning

Frazer Rice (20:42)
Great stuff. Larry, any final points on Gene Hackman’s Estate?

Lawrence D. Mandelker (20:46)
Your estate doesn’t have to be the size of Gene Hackman’s estate. You should be take these steps, regardless of how large your estate is. You should be working with someone who’s well-versed. Who is going to give you the information that you need to effectuate your wishes.

Frazer Rice (21:02)
How do the listeners find you?

Lawrence D. Mandelker (21:05)
I am a partner in the New York office at Venable. They can email me at lmandelker at venable.com . More than happy to talk to anyone.

Frazer Rice (21:20)
I’ll have that in the show notes. Thanks so much for being on.

Lawrence D. Mandelker (21:23)
Thank you. I appreciate this.

Further Links

Some links related to lessons and Gene Hackman’s Estate

Preserving Legacies (And the Applicability to Gene Hackman’s Estate)

Three Estate Planning Mistakes (and Gene Hackman’s Estate)