Avoiding “Happy Accidents”
“We don’t make mistakes, just happy accidents.” – Bob Ross
I recently watched the Netflix Documentary, Bob Ross: Happy Accidents, Betrayal and Greed. I remember watching The Joy of Painting when I was a kid. He was such a joyful painter and made it look so easy painting his “happy little trees”. He had such a calm demeanor and was full of optimism, so passionate about his work. Ross entrusted his business partners to all the business decisions while he focused on his work, his art, his passion. The documentary is a great watch for anyone, but does teach some important estate planning lessons.
It is easy for us to get caught up in what we are doing and have faith that our trusted partners naturally have our best interests at heart and we may blindly leave everything to chance. Bob Ross’s story paints an important picture (pardon the pun). As a quick summary, Ross established Bob Ross Inc. with equal partnership shares among himself, his wife and his business partners, Walt and Annette Kowalski. The contract among the partners stated that if one of them should die, that share would be equally distributed to the remaining partners, and not to a named heir. Separately, he also established the Bob Ross Trust which left 51% interest to his brother and 49% interest to his son at his death. The trust stated that at his death, all rights to his name and likeness would pass per those interests. After a grueling legal battle with the Kowalski’s, Bob’s brother, with the 51% controlling interest, eventually gave in and signed over these rights to the Kowalski’s. They now had 100% interest in Bob Ross Inc. as well as all rights to Bob’s name and likeness. This was not in line with Ross’s wishes, and now his heirs were essentially disinherited.
The Forbes article What the Bob Ross Estate Fight Can Teach Business Owners, by Eddleston and Ruzek details some extremely important lessons for ensuring your wishes are carried out appropriately. First, always have your own legal counsel. Mixing business and friendship is a slippery slope. To plan for the worst, even when expecting the best, is a valuable lesson. Having your own counsel separate from business partners, or even family members, allows for an objective party to offer a clear point of view. Someone else to see the bigger picture when you may only see the good. Trusted counsel from an outside point of view can be invaluable.
Secondly, carefully consider how shares are divided now and how they will be divided upon a shareholder’s death. Understand the different types of ownership rules and how they affect your heirs.
Third, revisit your last will and testament annually. Circumstances change, people come in and out of your life, a falling out with your best friend, a divorce, an unexpected successful business venture that changes your overall income picture, or you embark on a new philanthropic endeavor you’re deeply passionate about. While you may never need to make a change, it is best to check in occasionally to ensure nothing is missed.
And lastly, never sign away the rights to your name, image and likeness. Bob’s entire legacy and all of his success went to his greedy business partners. The documentary alleges that Mr. Ross’s business partners saw him as a brand, not a person, and they banked on it, swindling his heirs out of millions in profits since they owned these rights.
So while we are busy painting “happy little trees” like Mr. Ross (or growing our business, managing our investment portfolio, or building a nest egg) we must remember that even though reviewing finances, talking to legal counsel, and contemplating death while drafting a will may not be what we are passionate about pursing, it is necessary to ensure all the hard work and legacy is passed on as we intended and to those that truly matter.
For more information, please contact:
Wendy M. Swift, CTFA
Vice President and Trust Officer
Email: wswift@fs-trust.com
Phone: 302-573-5818.
The posts expressed are views of FSTC and are not intended as advice or recommendations. For informational purposes only. FSTC does not offer tax, legal, or investment advice, professional counsel should be sought for tax or legal advice.