The details of Lou Reed’s estate and will have been splattered across newspapers and the internet, discussing which houses he left to his wife and how the money for his mother’s care must mean he has forgiven her for the electroshock therapy of his youth. Lou Reed of the Velvet Underground died at the age of 71 last year, leaving a sizable estate to his family. However, the setup of Lou Reed’s will means that the split up of his assets is messy and public. The main beneficiary of his will is his wife, to whom he left the majority of his fortune. He also left his sister a much smaller chunk of money. So where did he go wrong? Lou Reed used a will and a will alone to ensure that his wished would be followed after his death.
The use of a revocable living trust could have protected Reed’s privacy; the probate process is necessarily public, letting the tabloids (and us) know who is getting what. The same is not true of a revocable living trust, since the assets being distributed remain safe in the trust, not directly owned by an individual. Wills have to go through a probate court, which can lengthen the process, but also makes all of your assets public information. Trusts can be used to bypass the process.
Probate isn’t only painful because its public- probate court is stressful and time-consuming (doubly so in PA). The process also makes it easier to file objections to a will than it would be to a trust that is administered privately. This is a breeding ground for family fighting and discontent. Trusts are better at containing detailed instructions than a will, and a comprehensive trust document is going to make dealing with changes, like a sudden influx of income, easier.
The singer and songwriter’s estate plan failed to anticipate the substantial increase in his wealth after his death. He earned more than $20 million after his death from his copyright, publishing, and performance interests, making the amounts dictated in his will inaccurate. Reed could have easily set up a better estate plan- he knew he was suffering from liver disease, and could have made the distribution of his estate less painful and public for his family.
If you are located in Montgomery, Delaware or Philadelphia County and would like to discuss your estate plan, please contact Sallen Law, LLC.