Speaker: Maritess Bott
Maritess:
This has been a crazy estate. It’s still ongoing. Larry King died on January 23rd, 2021, so just a little over a year ago. He had an interesting personal life in a sense. He was married seven times; he fathered five children. His estate, it’s hard to know, but roughly $50 million. It’s a lot—a lot of money. Shortly after he died, they went right to probate. They—meaning all the parties involved.
The parties involved are his last wife—so he had seven wives—but his last wife was named Shawn Southwick. She was married to him in 1997. They did have two kids, Cannon and Chance. In 1997 they got married. By 2010 they had already filed for divorce—it didn’t go through—they stuck it out. In 2019, Larry had suffered a stroke. Soon after that stroke, they started filing divorce proceedings again. This divorce was never finalized—therein lies an issue. They started divorce in 2010—it didn’t go through. 2019, still going through it, and as you could imagine, a divorce of this size likely will go a long time—so 2021 is when he died and it still didn’t get finalized.
In between that time, in 2015, the couple did get together and go to a lawyer; they signed an estate plan. Which in my world is like yay, that’s good. However, that particular estate plan of course was naming Shawn as trustee, and she probably was the beneficiary of the estate, and then the balance goes to the kids—which I don’t know which kids, right? At the same time too, they also signed what is called a postnuptial agreement. Most people have heard of prenuptial agreements, but this is post. You can always agree to things even after you’ve been married a few years. This particular postnuptial agreement also said, limited distributions to his kids from previous marriages. That’s an interesting note, because in 2015 they created an estate plan, but then they also signed this contract that said you have limited ability to give to your kids from the previous marriage, which is three.
After they had filed for divorce, Larry wrote a handwritten will. In this will he says, I’m giving everything to my five kids. According to some articles, this will was barely legible, portions are scratched out, phrases are crossed off. In the legal world, it’s called a holographic will. In Illinois we can’t have them—they’re not allowed—and I’ve tried a couple times with some of my clients’ families. In California, where he died, it is available and allowed. A holographic will—the requirement says it must be signed by the person, the testator who created the will, and the material parts of the will must be in his handwriting.
Conceivably, in California, this will could be approved by the court. I don’t know if it has. To be honest, I know that probably there’s court documents that can show that, but I have a feeling things are being fought.
The last wife, her name was Shawn Southwick, is of course trying to say we’re still married. I have a will, I have a trust, I have everything that he signed—that everything’s probably going to her. The kids from the previous marriage are like, nope, we have this will that he wrote out and that should be the document that we use. As you can imagine, with $50 million at stake, this is still ongoing—still ongoing. It’s going to be around for a long time. It’s going to be quite lengthy, quite expensive, and eventually it’ll get—some will go to the surviving spouse, some will go to the five kids.
Sadly, the sad situation is, two of his kids actually died even before him. One was a heart attack and one was a particular issue, I believe cancer. I don’t remember. Just in August, the same month—August of 2020—two of his kids died and then he died January of 2021. Just five months later. Sadly, in any event, what does that say? When you have children that die before you, then it would typically go downwards. If those two kids who predeceased him have children of their own, then their portion—whatever their father should have gotten—goes to those kids. That’s another issue in itself—where if neither of these wills are even accepted, we don’t know—then those kids also get something. It just depends on what the wills say and all of that.
What are the lessons learned? This story is still just at the beginning stage. I’m always interested when I hear about these kinds of cases because at least people can relate to the issues. Not necessarily the number, right? We all don’t have $50 million. I understand that. But it doesn’t even matter—the $50 million versus your $500,000 estate. It doesn’t matter. It’s just the point that these are things that are so important to write out, so important to plan out, so important to write—and really do it at a time when you have all of your capacity and wits about you.
Blended families—I’ve said this in this podcast before—is just even that much more complicated. That’s just important to write down what you want to do because ultimately this is what happens—you have a surviving spouse, children from previous marriage, fighting it out—and it’s a lot of money that could just be wasted on court fees and legal fees. Or you’re giving your money to—that’s not what Larry King probably would have wanted to happen.
A second thing to consider is estate taxes. The federal government is always saying, well, when you die, I want something given to us because we have estate tax due. Roughly it’s about $11.6–$11.7 million as an exemption amount. Just rounding it to $12 million is exempt—not taxable. Anything above that, which in this case would be $38 million, is going to be taxable. The government gets a big chunk, and the top tax bracket in the estate tax realm is 40%. That’s roughly $15 million that the family has to come up with and give to the federal government. That’s on top of legal fees, court fees, and all that.
There is a possibility that when something goes to a surviving spouse, you do get what they call a marital deduction—meaning everything can go to the surviving spouse without tax due. But when she dies, that’s part of her estate, and of course the government takes a chunk at that point. There could have been some tax planning put into Larry King’s estate plan. We could have done some planning with respect to his wife, but they were going through a divorce, so that probably wasn’t his plan. But we also could have been a lot more active—proactive—in giving some money to charity, maybe creating a family foundation—the Larry King Family Foundation—so that we give zero to Uncle Sam.
I would rather, for me, if I have a $50 million estate, I’d rather give the $15 million that was due to the government to a foundation that helps support children in underserved countries. Schooling, pet projects, charities with pets—there are so many charities out there that could use the $15 million. Instead, it’s going to go to our government.
When you’re going through a divorce, another lesson learned is, it doesn’t matter if you think, oh, it’ll be easy, it’ll be only six months. I would start thinking about your estate planning documents because if anything happens to you during the divorce proceeding, you want to be prepared. You want your kids or your sister to be taken care of, in case you’re disabled. Not necessarily your soon-to-be ex-spouse. In Larry King’s situation, once he filed for divorce in 2019, his estate plan could have been updated right away so that we capture all of those wishes at that time. That’s really important.
Another situation is with those holographic wills—that’s just another lesson to learn. I would stay away from them. Just do it the right way. Make sure that we have everything written down, typed up, easy to read, and you’re signing it in front of witnesses and notary publics. It’s important to have your wishes actually carried out—not just written out—and then all of a sudden it’s irrelevant because maybe the judge doesn’t accept it. If you died in Illinois and wrote it out, it wouldn’t be accepted. Just don’t do it. I know you feel like, it’s my last chance, I got to write down my wishes. Spend the time, put your wishes down, and review it, and update it often—especially when you have multiple marriages and certainly multiple children from those marriages. That is really the big lesson.
Lots of lessons—but let this be your wake-up call. Let this be your wake-up call to do something right now. You don’t have to have $50 million to write an estate plan. You just have to have assets, and you have to have the heart to make sure you want the family not to deal with this in a courtroom. It’s the heart—it’s the gift that you give to them by making it easier and less expensive and all of that.
Somebody referred to probate as a lawsuit that the family files against themselves. I like that. I like that—it makes it clear that it’s really just a lawsuit. There’s not two parties; it’s mainly one party, the family, but then there’s multiple parties within the family that can fight over things. You don’t want that. You don’t want that. Come and see us if you have questions. You can always go on our website and check us out and ask questions or set up an appointment. You could also come to one of our webinars or seminars that hopefully will be out and doing some more in-person seminars as well.
Once again, I am Maritess Bott. Thank you for listening to or watching our blog today, and we hope to see you soon.
