Oops I did it again: Celebs buggering up their money (and how not to do the same)Dec 04, 2017
TMZ, Entertainment Tonight, Who, and Women's Weekly are hardly the typical 'research houses' you'd think a financial planner might use.
But, they can provide some interesting insights into what the rich and famous do with their money. (But not quite enough to understand why Selena Gomez is dating Justin Bieber again. Why, Selena, why?)
Our net worth might not be in the same league as the stars, but their experiences, successes and mistakes with money, can still teach us a thing or two.
Think back to 2004. Britney Spears had not long released "Toxic"; married Jason Allen Alexander (not George from Seinfeld) in Vegas for a whole 55 hours; and went on to marry god's gift to women, Kevin Federline, just a few months later.
If you're unfamiliar with the Britney timeline, that's after Justin Timberlake, but before she shaved her head and got busted lip syncing. #OMG #leaveBritneyalone
[Don't judge me for googling the life and times of Britney]
In 2004, Britney paid a whopping $1.3 million to insure her promotional tour through the United States, Canada and Europe.
Lucky, because in June of the same year she fell and injured her left knee while filming a music video. She needed arthroscopic surgery and spent six weeks in a thigh brace, followed by several months of rehabilitation.
The tour was cancelled.
Bye bye income. Hello insurance claim.
So, Britney submitted a claim for $9.8 million to the eight insurers that agreed to cover her. All but one denied the claim.
And that last one, a French insurer, supposedly didn't even respond to the submission.
Britney had failed to disclose she'd had some pretty decent knee injuries in the past; one which required surgery.
If the facts of the case are correct (note: I do not have a direct line to Britney Inc.), the failure to disclose that information meant the insurer had the right to void the contract. Result: $1.3 million in insurance premiums down the drain; $9.8 million in claims not paid; and no income from the cancelled tour.
Oops, she did it again.
But it's not just the rich and famous who get caught out by this stuff.
It all comes down to a legal obligation called "duty of disclosure".
"Under the duty of disclosure, a person applying for insurance must disclose relevant information to the insurer before a contract is entered into."
And that's why they ask so many questions when you're applying for insurance, and why it's so important to answer them fully and truthfully.
But it's not just insurance that can be the cause of money mess-ups for celebs.
When a celebrity dies, there's usually a large amount of money involved in their estate. And without a will that's clear and covers all the possibilities and questions, it can be a disaster.
Peter Brock had an estranged spouse, a partner, and several children to consider in his will, as well as at least one Ferrari. There was complexity and lots of money and assets up for grabs.
Unfortunately, he failed to complete and sign all the parts of his DIY will kit, and it resulted in a costly, stressful battle for those left behind.
Rule of thumb (somewhat tongue in cheek): If you have a Ferrari, don't use a DIY will kit. I know a good financial adviser 😉 who can point you in the right direction.
And then there was Prince, who didn't have a will at all, for his $200 million estate. More than 45 people filed claims in the wake of his death - including his wife, children, siblings and other relatives. What a disaster.
But celebs don't always mess it up.
Frances Bean is the daughter of Kurt Cobain, who died in 1994 when his daughter was just 18 months old.
Recently, Frances has been going through a divorce, which has made her financial details available on public record. So, we can get a bit of an inside look into how Cobain, the lead singer of Nirvana, provided for her after he was gone.
Legal documents show that Frances receives about $102,280 US each month, in royalties and income from Cobain's estate. Most would think that's a decent amount to live off, but she also listed her spending at $206,000 per month.
No need to get the calculator out…the maths doesn't work.
Of course, overspending isn't uncommon amongst celebs and professional athletes.
But with spending habits like that, imagine if she'd received all that money in one hit. Chances are, she would've ploughed through her inheritance real quick.
I don't know precisely what Kurt organised, but if you're worried if the recipients of your inheritance will use your money sensibly, a testamentary trust might be a good option. It can provide an income stream to your beneficiaries, and the rest of your assets can be invested and hopefully grow over time. It also means your hard-earned money is less likely to be squandered by the people you love (who might not be behaving rationally when they're processing your death) or flittered away by the influence of bottom feeders and hangers-on.
So next time you're reading a gossip mag (yeah, yeah…only while you're waiting at the dentist) have a think about how you might apply the lessons from celebs to your own life.**
**Also applies to getting a blue mohawk or ill-thought-through tattoo in a rude spot. #justsayno