Celebrity gossip can provide valuable financial-planning lessons for the rest of us — especially when they do it wrong. And when a famous person’s financial woes are splattered all over the press, you can be pretty sure somebody did something wrong. Most wealthy people like to keep their affairs private, which is why they hire teams of professionals who not only can keep a secret, they also know how to utilize trusts and other legal mechanisms to minimize publicity when it comes to their financial affairs. Stars may revel in the public eye when they’re on the red carpet, but they’d just as soon not have you reading about their botched investments or ongoing tax troubles in the tabloids.
Wills are public documents, which is why they are prime fodder for the financial press. When a celebrity’s will is made public, it often becomes a feeding frenzy for journalists who can’t wait to report who left what to whom. If the will is contested or contains surprises about the people in the deceased’s life (a secret mistress, for example), the story reads like a novel with all the suspense of a mystery but with more excitement because it happened to people you (almost) know.
The latest celebrity financial gossip column to hit the press appeared in the April 27th issue of the Wall Street Journal. It told of the ongoing saga of the Atkins estate. Dr. Robert Atkins was the diet guru who founded The Atkins Plan method of high-protein, high-fat, low-carb eating. His demise was due not to his artery-clogging diet but to a fall on a snow-covered New York sidewalk in 2002. His estate plan at the time of his death was actually the picture of health. He provided generous support for his mother and his wife, Veronica, and his lawyers utilized trusts with carefully drafted language to save estate taxes and give Veronica maximum flexibility and control. That may have been his biggest mistake.
The Atkins estate would have stayed out of the news except that the financial advisors who were managing Veronica’s money filed suit against her for improperly firing them. Veronica says the advisors engaged in self-dealing and waste at her expense. The advisors say she came under the spell of a con man who convinced her to fire them so he could take control. (Veronica and Alexis Mersentes were married in March at a courthouse near Palm Beach, with no family or friends present.)
What’s the lesson in all this? The Wall Street Journal reports that Dr. Atkins’ widow had little experience in business or finance. She was unprepared for the windfall she received after his death, when the diet-products business he had built was sold for some $600 million. After taxes and payouts she was left with about $400 million. A better plan might have been for Atkins to appoint a corporate trustee such as a bank or trust company to help the surviving spouse manage the money. Without a corporate advisor, Veronica was left open to all manner of new friends, advisors, and potential predators with ideas about how to manage her money.
In the picture accompanying the WSJ story, the smiling former Veronica Atkins (now Mrs. Mersentes) looks very happy standing next to her new husband and financial confidant. It remains to be seen whether she’ll be back in the papers in some future “heiress-who-got-fleeced” story. Stay tuned for more financial-planning lessons from the popular press.
Bambi Holzer, president of Bambi Holzer Financial Group, is the author of four books on personal finance. She is a Certified Specialist in Planned Giving (CSPG), a Certified Estate Advisor (CEA), an Accredited Investment Fiduciary (AIF) and a Registered Representative with Brookstreet Securities Corporation, member NASD, SIPC. She can be reached at 877-905-3100. This document is for informational purposes only and should not be regarded as a recommendation, an offer to sell, or a solicitation of an offer to buy any securities. Specific recommendations are made only based on review of a client’s individual investment portfolio upon request. This document is the opinion of the authors and does not reflect the opinions of Brookstreet Securities Corporation. Past performance is not a guarantee of future results. Investing in narrow economic sectors involves its own characteristic set of risks including, but not limited to, the risk of loss due to the inherent lack of diversification associated with concentration of assets in a specific, sometimes, emerging field.
