The recent passing of legendary actor Gene Hackman, 95, and his wife, Betsy Arakawa, 65, within days of each other in their Santa Fe, New Mexico, home underscores the importance of contingency planning and other factors in developing an estate plan. For example, what if your beneficiaries, trustees, agents, or attorneys die? Who will succeed them?
Despite his wealth and his ability to enlist excellent estate planners, there were critical holes in his plan which resulted in loose ends with regard to their considerable estate.
The circumstances surrounding the deaths of Hackman and Arakawa are still being investigated even though, officially, Hackman died of heart disease, impacted by Alzheimer’s disease. Arakawa, who died of hantavirus pulmonary syndrome, is believed to have passed seven days before Hackman. The timeline of their deaths may impact who benefits from their estates.
(Note: The Estate Lawyers, APC, does not practice in New Mexico, the laws of which govern the case.)
Here are four takeaways from this unfortunate case.
- The Importance of Regularly Updating Wills
Gene Hackman executed his will in 1995, with the most recent amendment made in 2005. The will bequeaths his entire estate to his wife. Arakawa’s will provides that her estate would pass to Hackman if he survived her, unless both spouses died within 90 days of each other, as they did, in which case her estate would be directed to a charitable trust.
Arakawa’s estate appears to be the better plan because it includes instructions that address a scenario where Hackman did not survive her. Hackman’s will, on the other hand, presents a potential issue. It does not name an alternate beneficiary if his wife predeceased him or died shortly thereafter. As a result, with no clear direction for the distribution of his estate under such circumstances, probate proceedings will likely be necessary to resolve the matter.
The key lesson here is to review wills every few years or after significant life events, such as marriage, divorce, death of a spouse, or the birth of a child, even grandchildren.
- Contingency Plans for Beneficiaries
Hackman’s will did not specify alternative beneficiaries in the event that his wife predeceased him, leading to uncertainty about the distribution of his $80 million estate. Client wills should include clear contingency plans to avoid intestacy and ensure that the client’s wishes are honored. Including secondary and tertiary beneficiaries can prevent complications and disputes among heirs. Some of the most important steps to take are:
- Name two to three successors (usually family or close friends) to act as a lasting power of attorney. If the first one dies, then the second one can step in to help.
- Name who will inherit from you and what each will receive. Then name a next successor who will inherit from you should a beneficiary die early.
- Name a corporate trustee or an attorney to serve as trustee if all other named trustees are unable or refuse to serve in that capacity.
- If property is bought or sold, the evidence (titles, sales document, etc.) should be included in the trust binder.
- The Value of Trusts
Arakawa’s will included a provision that her estate would be placed into a trust and later donated to charity if she and Hackman died, as they did, within 90 days of each other. Trusts help manage and protect assets, provide for beneficiaries, and fulfill charitable intentions. They can offer flexibility and control over the distribution of assets, which is particularly important in complex family situations. For example, testators and planners may wish to consider family members or close friends – those who otherwise might not be beneficiaries because they are healthy and gainfully employed, for example – should be included as beneficiaries in case they become incapacitated due to illness or injury. Most importantly, a trust helps to avoid the time and expense of the administration of a probate estate.
- Contingency Health and Welfare Plans for Testators
Finally, no one wants their loved ones to spend their final days the way Hackman and Arakawa did. Nor would anyone want that for themselves. Hackman suffered from severe heart disease and advanced Alzheimer’s, which likely prevented him from notifying authorities of his wife’s death. Estate plans should address the potential for such circumstances. This includes appointing agents under a durable power of attorney and an advanced health care directive. While this can be difficult for anyone who fears they will lose privacy and independence, an elder care lawyer can help the parties create a plan and budget to ensure someone is checking in on elderly clients should their support system break down. A certified caretaker, other than the spouse, can make sure both spouses are eating well and are being cared for medically.
Conclusion
The Hackman and Arakawa case illustrates the need for comprehensive estate planning that goes beyond drafting a will. Estate planners should work with clients to develop a holistic plan that includes trusts, powers of attorney, healthcare directives, and beneficiary designations. But the most important lesson from this case is the need for contingency planning for beneficiaries, agents, and the testators themselves.