Trouble in Margaritaville

By Hyman G. Darling, Esq.

Over the past couple of years, you may have read about all the famous people who passed away either with no estate planning documents or perhaps documents that were not up to date or complete enough to avoid contest.

In the past two months, there have been several notorious people in the news that are causing lawyers and judges to deal with litigious matters regarding estates. The first estate was Jimmy Buffett’s. In this brewing legal battle, Jane Buffett (his wife) filed a petition to remove her co-trustee of the marital trust, Jimmy’s longtime business manager. It was estimated that the estate was worth approximately $275 million. This trust was to continue for Jane’s lifetime, but she now alleges that the business manager was charging excessive fees, mismanaged the trust, and has become adversarial and hostile toward her.

It is unfortunate this has occurred because now the funds are going to be scrutinized and her legal fees, the trustee’s legal fees, and potentially backup and independent trustees’ fees will be taken from the trust, thus diminishing the funds available to Jane.

Hyman G. Darling

“It is very important to think clearly about what will happen if the children cannot agree. Perhaps the documents should have a provision stating that, before litigation ensues, the trustees or beneficiaries should be forced to mediate the matter in an attempt to resolve the conflicts without litigation.”

This situation is not uncommon. Clients often wish to name two or more children co-trustees or perhaps powers of attorney, personal representatives (formerly called executors), or healthcare proxy agents. The clients believe the children would get along and make decisions together. However, when one decision maker does not agree with the other, it places the client or their family in a precarious situation because, if they cannot agree, there is a stalemate until such time as either a mediator or court makes a decision as to what is correct or who should make the appropriate decisions.

Some clients feel that the oldest child should serve, some clients feel that the child who is in business should serve, and others believe they should have an independent trustee so that this situation does not occur.

Oftentimes, however, the children cannot agree as to what is best for the parent or for the ultimate beneficiaries of the trust. Therefore, it is very important to think clearly about what will happen if the children cannot agree. Perhaps the documents should have a provision stating that, before litigation ensues, the trustees or beneficiaries should be forced to mediate the matter in an attempt to resolve the conflicts without litigation. Often, once litigation is filed, there is a line drawn in the sand and no turning back, which causes perpetual disharmony in the family.

Dollars and Sense

Another significant celebrity in the news is Jeff Bezos, with his prenup and recent Venice wedding. Since the Amazon founder did not have a prenuptial agreement with his first wife, it was clear to him that he should have a prenuptial agreement for this marriage to Lauren Sanchez.

Although there were somewhat disparaging comments regarding her wedding gown, the location, the cost of the wedding, and the numerous celebrity guests, the reporters did not pay much attention to the prenuptial agreement, the details of which are not public. However, the prenuptial agreement presumably would provide that, if the marriage were to be dissolved or he were to pass away first, his wife would receive a portion of the assets based on how many years he was married to her, or perhaps based on the size of his estate.

While most of you who are reading this do not have an estate the size of Bezos’s (although his estate is reduced by $36 billion in Amazon stock he paid to his first wife), it is important to consider what would happen to your assets if you die leaving assets to your children. Perhaps your children’s marriages are not the most sound, and you wish to be sure that the children or their children will receive assets. Therefore, perhaps a trust should be established for them, or maybe leave some assets to your children and some assets to the grandchildren in order that the in-law (sometimes referred to as the out-law) would not receive this unintended inheritance.

Bottom Line

The lessons here are not only that documents need to be prepared, but significant thought should be given to the language in the documents, the individuals who are named or not named, and the distribution of those assets. Also to be considered are long-term care issues and tax issues to maximize the amount that will be passing to the next generation.

Of course, charities should also considered in estate planning documents, not only to minimize taxes, but also to carry on the legacy built during one’s lifetime.

Hyman Darling works in the Springfield office of Bacon Wilson. He is licensed to practice law in Massachusetts and the U.S. District Court District of Massachusetts. He is an active member of the National Academy of Elder Law Attorneys and is a certified elder law attorney. Additionally, he is a member of the Special Needs Alliance and the Hampden County Bar Assoc.