Celebrities: they’re just like us! They navigate the grocery store, negotiate their children’s temper tantrums and even make mistakes with their finances. When a celebrity makes a money mistake, the effects could be even costlier because of the large amount of money involved. Take a look at these cases of celebrity money mismanagement and learn from the mistakes of the rich and famous.
- Wealth Management No-No’s: Living Beyond Your Means
With additional money coming in to some Del Mar residents, it’s easy to spend frivolously and assume the money will never stop coming in. But even celebrities need to worry about job security, and sometimes the money does stop coming in.
Nicolas Cage is a good example of living beyond your means. Cage invested in real estate prior to the 2008 financial crisis, accumulating 15 homes that quickly depreciated. He also purchased a bevy of luxury cars, motorcycles, art and even a private island. His overspending came to a head when he was hit with a $13 million tax bill he couldn’t pay, and has since been working and selling assets to get back afloat.
MC Hammer is another celebrity guilty of getting too big for his britches, and his britches were pretty large to begin with. Hammer also spent lavishly, at one point having over 200 employees on his payroll, before filing for bankruptcy.
- Wealth Management No-No’s: Not Signing a Prenup
Pre- and postnuptial agreements are a touchy subject for couples blinded by love, but the truth is that many marriages do end in divorce, especially celebrity marriages. When Paul McCartney penned “When I’m 64,” you can bet he didn’t imagine he’d be fighting a bitter court battle with his soon-to-be-ex-wife over their divorce settlement at the age of 64. Because he and Heather Mills didn’t have a prenuptial agreement, their battle raged on publicly until Mills was eventually awarded about $50 million.
Madonna suffered an even larger loss after her divorce from Guy Ritchie, to the tune of more than $75 million. Despite bringing the majority of their assets to the relationship, without a prenup she was legally not entitled to take it all with her.
- Wealth Management No-No’s: Forgetting about Your Will
Heath Ledger created a will before he died however, at the time of his unexpected death in 2008; it hadn’t been updated to include his daughter Matilda or her mother, Michelle Williams. The will dictated that his property be left to his parents and sisters, who announced that they would take care of both Matilda and Williams, despite not being legally obligated to in the will.
Anna Nicole Smith made the same mistake of failing to update her will after a major life event. In her case, the major life event was the death of her son, to whom her estate was still bequeathed in her will at the time of her death. Her outdated will contributed to a lengthy legal battle for control of her estate and guardianship of her daughter, who was not included in the will.
Stay Tuned for Part 2, Coming Next Week…
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