Most people love their children and would like to provide well for them. And how better to provide well for your children than to give them abundant wealth? Well, estate planners appreciate how wealth can be both a blessing and a curse. In particular, most parents do not recognize how harmful it can be to leave an inheritance outright to children. Lisa Marie Presley, daughter of rock megastar Elvis Presley, is a sad example of how inherited wealth is no guarantee of prudent personal finance.
In the height of his popularity, Elvis earned vast sums from his entertainment career. Yet by the time he died in 1977, his estate had dwindled to a mere $5 million. See “The Presley Inheritance,” People Magazine, 3/01/1993. In the 16 years following the death of Elvis, his estate was managed wisely by his widow Priscilla. And so when Lisa Marie turned 25 on February 1, 1993 and was ready to start collecting her inheritance, the value of the Estate of Elvis had climbed all the way back up to $100 million. The People Magazine article referenced above painted a rosy, optimistic picture of Lisa Marie’s maturity and capabilities when she stood ready to collect her inheritance. “I think marriage and motherhood have made her a responsible person,” said Jerry Schilling, a longtime Elvis confidant and former manager for Lisa Marie. “I have seen her grow so much.”
That was then. Now, let’s flash forward to 2017. Lisa Marie is currently embroiled in a bitter legal contest with her ex-husband, Michael Lockwood. See Fox News, 2/19/2017. The specific pending legal proceeding is Lockwood’s request for $40,000 per month in spousal support and $100,000 for attorney’s fees. In response Lisa Marie has made court filings alleging she now owes millions in back taxes and credit cards. She also notified the court that she has been in a treatment facility for undisclosed reasons since she moved from Tennessee to California last year. We also understand that the two children of Lisa Marie and Lockwood are in state child protective services (although the precise reasons for that are not publicly known).
What is interesting is Lisa Marie’s court filings also indicate that she receives an inheritance check in the amount of $100,000 each month. We have a mixed opinion of that arrangement. On the plus side, given Lisa Marie’s apparent substance abuse problems and clear tendencies towards financial mismanagement, it is obviously a good thing that she is unable to access the principal of her inheritance. For if she could access her wealth outright, then so too could her numerous creditors. And then her share of Elvis’s estate would have disappeared long ago.
Yet on the negative side, this is a good example of why forcing a mandatory periodic income distribution is not the best idea. As far as we know, those $100,000 checks will keep flowing no matter the circumstances of Lisa Marie’s personal life. A divorce, substance abuse problems, tax problems, and personal excessive spending and debt problems are all circumstances when it is crucial for a Trustee to have the ability to refrain from making distributions to a beneficiary. So unfortunately it seems that the caretakers of Elvis’s estate have no discretion or oversight over how Lisa Marie uses (or misuses) her inheritance checks.
Certainly most of us will not have to worry about leaving hundreds of millions of dollars in inheritance to our children. But we all have the ability to engage in prudent estate planning so that whatever we do leave to our loved ones can be wisely administered for their benefit.
If you have any questions about the issues presented above or care to discuss any other planning issues, please call us at 860-769-6938, visit our website at http://www.weatherby-associates.com or email us at firstname.lastname@example.org.