Larry King’s Legacy: An Estate Plan Debacle

Legendary TV and radio host, Larry King, died at Cedars-Sinai Medical Center in Los Angeles on January 23rd, 2021 at age 87. Larry was hospitalized in December due to COVID-19, but he’d recently been moved from the ICU to a regular hospital room after recovering from the virus. However, the famed broadcaster suffered from a number of several other health conditions over the years, including multiple heart attacks, kidney failure, and diabetes. He ultimately passed away from sepsis from an unrelated infection.

Larry’s career spanned more than half a century. Larry became the most famous interviewer of his generation as the host of CNN’s Larry King Live, a follow-up to his nationwide call-in radio show, The Larry King Show, which started in 1978.Larry retired from CNN in 2010, but up until the very end, he still hosted the streaming video cast “Larry King Now” on Hulu and RT America.

With his success in the media and the fact he continued working long after most people would have retired, Larry amassed a fortune estimated to be worth some $50 million. In addition to Larry’s fame as a broadcaster, he also became equally well known for his numerous marriages. The media mogul got married a total of eight times to seven different women. Yes, he remarried one of his exes.

With so many marriages, Larry was the father of five children, nine grandchildren, and four great-grandchildren. With so much money and so many spouses and children, it wouldn’t be much of a surprise that there would be some conflict over Larry’s estate following his death.

However, three factors are sure to make his estate especially troublesome.

First, Larry was in the middle of negotiating a divorce settlement with his seventh wife, Shawn Southwick King, 61, when he passed away. Second, in October 2019, Larry created a new handwritten will, which stipulated that $2 million of his estate should be equally divided among his five children upon his death, yet the document makes no mention of his seventh wife.

And finally, two of the five children—Andy, 65, and Chaia, 51, —named in Larry’s hand written will of October 2019 died in August 2020. It comes as no surprise as an attorney that Larry failed to change his handwritten will to reflect the death of his 2 children 10 months later.

Larry’s seventh wife claims they worked with estate planning lawyers in the past, and given Larry’s wealth, that could be true. Larry likely had other estate planning vehicles, such as trusts, in place to protect and pass on some of his assets. But since trusts are private and their contents generally aren’t made available to the public, we don’t know the full details of Larry’s estate plan.

Even if that is the case, in light of his impending divorce and the existence of the new handwritten will, and the recent death of two of Larry’s children, this estate is going to see some major court action between Larry’s seventh wife and his surviving children over the $2 million in assets listed in the new will. In fact, Wife Number 7 has already announced that she plans to contest the handwritten will.

In the end, the fallout from this legal battle could make Larry famous for another reason—failed estate planning. However, with the proper planning, nearly all of the impending conflict over Larry’s estate could have been avoided. On that note, here we’ll outline several planning lessons we can learn from Larry’s death.

Till Death Do Us Part

According to The Wealth Advisor, at the time of his death, Larry was paying Shawn spousal support as part of their ongoing divorce negotiation, and she was reportedly seeking $1 million in annual spousal support as part of that deal. However, given that Larry died before the divorce was finalized, Shawn could inherit far more than that—and this is true in spite of the existence of Larry’s new will or even prior estate plans.

The reason Shawn stands to inherit so much is because California is a community-property state. Under California’s community-property laws, unless there was a prenuptial agreement or post-nuptial agreement stating otherwise, Shawn is entitled to 50% of any marital assets acquired during their marriage, regardless of what Larry’s estate plan leaves her. Given that the couple was married for more than two decades, Shawn’s ultimate inheritance will likely far exceed the $1 million per year she was seeking in the divorce settlement, which is something Larry likely would not be happy about. And guess who is left picking up the pieces? Yes, Larry’s surviving children are now facing the prospect of a lengthy and costly legal battle. This brings us to our first estate planning lesson.

Lesson #1: Update your estate plan as soon as divorce rears its’ ugly head.

Although Larry attempted to do the right thing by creating the new will, he should have taken the time to work with legal counsel to properly update his plan once he knew he was getting divorced—and ideally, before the divorce was filed. It’s imperative that you create new planning documents as soon as you realize divorce is inevitable.

Now realize that the King divorce was in California. In many states, such as California, once divorce papers have been filed with the court, you are not legally allowed to change your will or trust. In Colorado, once you know divorce is on the horizon see a Colorado estate planning lawyer immediately to amend your estate plan.

When creating a new will or trust, rethink how you want your assets divided upon your death. This may mean naming new beneficiaries for any assets that you’d previously left to your future ex and his or her family. And it usually means naming a new person to fill the roles of executor and/or trustee of your estate as well.

As we saw in Larry’s case, it’s important to keep in mind that some states have community-property laws that entitle your surviving spouse to a certain percentage of the marital estate upon your death, no matter what your plan dictates. So if you die before the divorce is final, as Larry did, you probably won’t be able to entirely disinherit your surviving spouse in your will or trust. But you can amend your plan to ensure the proper individuals inherit the remaining percentage of your estate should you pass away while your divorce is still ongoing.

Things would be much different had Larry worked with his estate planning lawyer to draft his new will. He could have created a much more robust will that not only would have stipulated exactly how he wanted his share of the marital assets divided among his children upon his death, but he also could have prevented several conflicts inherent with do-it-yourself planning. This brings us to our second planning lesson.

Lesson #2: Always work with an experienced estate planning lawyer when creating or updating your planning documents, especially if you have a blended family.

While it’s always a good idea to have a lawyer help you create your planning documents, this is exponentially true when you have a blended family like Larry’s. If you are in a second (or more) marriage, with children from a prior marriage, there’s an inherent risk of dispute because your children and spouse often have conflicting interests, particularly if there’s significant wealth at stake.

The risk for conflict is significantly increased if you are seeking to disinherit a family member. By creating your own will, even with the help of an online document service, you won’t be able to consider and plan ahead to avoid all the potential legal and family conflicts that could arise. For example, had Larry enlisted the help of an experienced estate planning lawyer to create his new will, he could have built-in provisions that would have made it unlikely that Shawn—or anyone else—would contest his will.

It remains to be seen whether or not Shawn will be able to successfully contest the validity of Larry’s new will. However, because the new will was created in such an informal manner, her case will be a lot stronger than it would’ve been had Larry worked with lawyers to formally create a new document. Indeed, Shawn told The New York Post’s Page Six that Larry never told her about the new will, and she believes someone pressured him to draw it up. If a trusted estate planning lawyer had been involved, the threat of such “duress” would be much less viable.

While handwritten wills, also known as holographic wills, can be valid, we don’t know the full circumstances surrounding the will’s creation, but several issues stand out. First, the fact that Larry was suffering from multiple serious health conditions and was in and out of the hospital could lead the court to question whether or not Larry was of sound mind when he created the new document.

Additionally, Shawn’s claim that Larry was pressured into changing his will could raise questions as to whether or not Larry was coerced into disinheriting her by one of his children, who sought to increase his or her share of the estate. And even if Shawn isn’t successful in contesting Larry’s new will, the resulting litigation will be a lengthy, costly, and needless ordeal that will deplete Larry’s estate at the expense of all of his heirs.

Finally, had Larry consulted with an attorney when seeking to amend his plan to account for his impending divorce, he would have been advised that a will is not the ideal planning vehicle for protecting and passing on his assets to his children. Instead, Larry could have used a trust for this purpose. And while there are several types of trusts available, we would have advised Larry to create a special type of trust known as a Lifetime Asset Protection Trust.

Using a Lifetime Asset Protection Trust, Larry could immediately transferred his share of the marital assets to his children upon his death or incapacity, without the need for court intervention, and also have ensured that those assets would transfer with airtight protection from common life events like divorce, serious illness, lawsuits, and even bankruptcy. Best of all, this asset protection would last for the lifetime of his designated beneficiaries.

Sadly, Larry chose to pass those assets to his children via a will, which guarantees that his family will have to go to court and through the probate process in order to gain ownership of his share of the assets.

In part two of this series, we’ll discuss how a Lifetime Asset Protection Trust would have benefited Larry and his family, as well as the complications that are likely to arise given that two of Larry’s children died before he had the chance to update his plan.