September 3, 2015

As is the case with many celebrity passings, there are lessons to be drawn from the estate of Paul Newman. In this particular case, it is important to understand that if a foundation will be run by family after the death of a loved one, early and clear communication is key. Rules for the governance of the foundation should also be outlined and explained sooner rather than later. The primary reason for this is because changes in estate planning can happen which alter the understanding of stakeholder roles in the foundation. 

Paul Newman changed his planning a dozen times before he died, shifting the plan from the original mandate that his four daughters would rotate through his Newman’s Own Foundation to omitting them entirely. With his four daughters removed from the picture, Newman shifted that responsibility to two of his long-time friends and collaborators.

What made such a big difference for his daughters was that his original plans were to provide each daughter with $500,000 (an amount that was later changed to $1 million) and an equal part share of 50% of his estate, with the other 50% going to Joanne Woodward.

In the end, all the funds went to Woodward to ensure her care, with any other distributions to happen after his death. With these personal changes in his estate planning, foundation management can be affected if other stakeholders are not included in the conversation. Be sure to approach your estate planning holistically.