10 Estate Planning Mistakes to Avoid
Estate Planning Mistake #3: Failing to Plan for Future Children — Michael Crichton
Your family can change faster than your estate plan.
The Michael Crichton estate planning story shows why an estate plan should address not only the family you have today, but also the family you may have tomorrow.
Crichton, the author of Jurassic Park and creator of ER, died from cancer in 2008 at age 66.
He had a sophisticated estate plan. His most recent will had been signed in 2007.
But when Crichton died, his wife, Sherri, was six months pregnant with their son.
The estate plan did not specifically provide for him.
That omission led to a probate dispute between family members.
Michael Crichton’s Son Was Born After His Death
Crichton already had an adult daughter, Taylor, from an earlier marriage.
His 2007 will directed most of his estate into a private trust. Published reports indicate that the trust benefited his wife, daughter, other family members and friends, employees, and a charitable foundation.
Then his family changed.
Crichton died in November 2008. His son, John Michael Todd Crichton, was born several months later.
After the child’s birth, Sherri Crichton asked the probate court to recognize her son as an omitted heir.
Taylor opposed the request.
The issue was no longer simply what Crichton’s estate planning documents said.
The court also had to determine how California’s omitted-child law applied to a child who was not provided for in those documents.
California Law Protected the Omitted Child
California law provides protection for certain children born or adopted after a parent signs his or her testamentary documents.
Under California Probate Code §21620, a child born or adopted after execution of the parent’s testamentary instruments may receive the share that the child would have received if the parent had died without those instruments.
There are exceptions.
For example, the rule may not apply if the documents show that the omission was intentional, if substantially all of the estate passes to the child’s other parent in certain circumstances, or if the parent otherwise provided for the child outside the estate plan.
That meant the language of Crichton’s documents mattered.
So did the circumstances surrounding his son.
In 2009, a Los Angeles Superior Court judge ruled that John Michael qualified as an omitted heir and was entitled to one-third of his father’s estate.
The court later approved changes to the distribution plan necessary to account for the new beneficiary.
A General Estate Plan Cannot Predict Every Life Event
Estate planning documents often contain language addressing descendants.
A trust might refer to “children,” “descendants,” or people born or adopted in the future.
That language is useful.
But it does not eliminate the need to review the plan when an actual life event occurs.
A pregnancy changes the facts.
A birth changes the family.
An adoption changes the family.
So can marriage, divorce, or the birth of a grandchild.
Those events may affect much more than the identity of the beneficiaries.
They may affect:
- how property is divided;
- when a child receives an inheritance;
- who serves as trustee;
- who serves as guardian;
- life insurance needs;
- beneficiary designations;
- tax planning; and
- the structure of trusts for children.
The better approach is not to rely on generic language and hope it produces the right result.
Review the plan.
New Jersey Also Protects Certain Omitted Children
New Jersey has its own omitted-child statute.
Under N.J.S.A. 3B:5-16, a child born or adopted after a parent executes a will may have a statutory right to share in the estate when the will does not provide for that child.
The result depends on the circumstances.
If the parent already had children when the will was signed and provided for those children, an omitted later-born child may generally be entitled to share in the portion provided for the existing children.
There are important exceptions.
The statutory protection does not apply when the will shows that the omission was intentional. It may also be inapplicable when the parent provided for the child outside the will and the evidence shows that the transfer was intended to replace a testamentary gift.
In other words, the statute provides a safety net.
It should not be your estate plan.
Don’t Make a Court Determine What You Meant
Consider the difference between two situations.
In the first, a parent signs a will when there is one child. Several years later, another child is born. The parent never looks at the will again.
After the parent’s death, lawyers must determine what the omitted-child statute provides.
In the second, the parent contacts the estate planning attorney during the pregnancy or after the birth. The documents are reviewed and revised to state exactly how both children should be treated.
The second approach is much better.
No one has to guess.
No one has to rely on a statutory presumption.
And family members have much less reason to fight over what the parent intended.
The Michael Crichton Estate Planning Lesson
Michael Crichton did not fail to plan.
He had a relatively recent will and a sophisticated trust structure.
The problem was timing.
His family changed after those documents were signed, and he died before his estate plan clearly addressed that change.
That distinction matters.
A good estate plan should contain reasonable provisions for future circumstances. But even excellent drafting cannot eliminate the need to review the plan after a major life event.
Pregnancy should trigger a review.
Birth should trigger a review.
Adoption should trigger a review.
The same is true when children marry, develop special needs, become financially independent, or otherwise experience changes that may affect the plan.
Do not rely on an omitted-child statute to finish your estate planning for you. When your family changes, make sure your documents change with it.
This article discusses publicly reported information concerning Michael Crichton and his estate for educational purposes. His complete private trust agreement is not publicly available, and public reporting may not reflect every provision of his estate plan.