Protecting your assets is a very important part of any estate planning. With about 40 million lawsuits filed in the U.S. each year, protecting your family’s legacy and assets is getting harder and harder. There are a lot of lessons to be learned from Depp’s experiences.
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Actors Johnny Depp and Amber Heard are in a contentious defamation trial in a Virginia court. Depp and Heard were married from 2015-2017 (15 months) and Depp is suing Heard for $50 million over a 2018 op-ed she wrote for The Washington Post in which she described herself as a "public figure representing domestic abuse." Though Heard did not specifically name Depp in the article, he claims it cost him lucrative acting roles.
But it was another pair of lawsuits involving Johnny Depp's assets that might be more relevant to those questioning the importance of estate planning. Because with about 40 million lawsuits filed in the U.S. each year, protecting your family's legacy and assets is getting harder and harder.
In 1999, Depp hired The Management Group to handle his expenses as his business manager. By then Depp had become a very wealthy actor who led a lifestyle that included 14 homes, a $75 million yacht and $30,000 a month for wine.
And as hard as it might be to believe, Depp's lifestyle cost him in excess of $2 million per month, which according to his business manager, was far exceeding his cash flow.
In January 2017, Depp hired a new business manager and conducted a financial analysis of his assets. During this analysis, he claimed to have discovered big investment losses made by The Management Group, so he filed a lawsuit seeking damages of $25 million.
The Management Group responded with a countersuit of their own alleging that early in Depp’s career, he borrowed $5 million from them to cover the expenses of his lifestyle and had allegedly defaulted on this loan. The countersuit sought to recover his loan by foreclosing on some of Depp's assets.
The lawsuits were eventually settled.
There are a lot of lessons to be learned from Depp's experiences – and it's not that the rich are different.
If Depp had established an asset-protection plan, he could have ensured that his personal wealth was protected from any potential lawsuits. In effect, it would have placed his assets under the ownership of a trust.
Depp would not legally own the assets, as they would be owned by the trust itself – protected from any lawsuits brought against him.
There's a lesson in that Johnny Depp saga: Protecting your assets and family's legacy should always be an important part of any comprehensive estate plan.
As such, you should consider placing your assets into a protective trust. And there are a few to choose from.
There are a lot of considerations when selecting the right trust for your situation. For example, you want to make certain that the trustee has hired a reputable investment manager for your assets. In addition, you want to make sure the professionals and fiduciaries have the requisite checks and balances in place.
Your financial advisor can help you select the right trust for your circumstances. It’s part of your personal estate planning process.
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