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Cautionary Tale of Philip Seymour Hoffman

Philip Seymour Hoffman was a talented actor who was known for his roles Boogie Nights, Almost Famous and Along Came Polly.  He even won an Oscar for best actor for his role in Capote.

However, like many talented actors, Philip Seymour Hoffman struggled with drug addiction and died from a drug overdose in February 2014.

At the time of his death, his estate plan contained only a will, which was signed on October 7, 2004 and about a year and a half after the birth of his son.

From the date of his will to his death, Mr. Hoffman had two more children (both daughters), won the Oscar and amassed a fortune estimated to be worth $35 million.

His will left everything to Marianne “Mimi”’ O’Donnell, the mother of his three children, but who he separated from in the year before his death.  Also, we know his private wishes were for son were that be raised in Manhattan, Chicago, or San Francisco so that he “will be exposed to the culture, arts and architecture that such cities offer.”

These were the main details of his will.

The will made no mentions of his two daughters

Philip Seymour Hoffman’s situation is a cautionary tale can of what can happen without proper estate planning.

Below are the estate planning mistakes he had made:

  1. At the time of his death, his will was almost 10 years old and during this time, he had significant changes his life. More children.  More wealth.  Separation from a long time partner.  Each of these events individually would create a need to reevaluate his estate plan and even more so when these events were combined.
  1. Since he never updated his estate plan (or will for that matter), his entire estate went to his estranged girlfriend and there were no protections in place. None his estate went directly to his children.  In fact, there were no provisions in the will related to his daughters.
  1. Also, his estate plan was hit with a lofty estate tax bill. Since Hoffman wasn’t married to Ms. O’Donnell, the transfer of property to her under the will did not qualify for the marital deduction, which allows you to transfer an unlimited amount of property to your spouse tax-free.  Instead, his estate was subject to approximately $12 million in estate tax.

With proper estate planning, Hoffman could have kept his wishes private, better protected his children and greatly reduced his estate tax.