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Checkpoint Contents
 Estate Planning Library
  Estate Planning Journals
    Estate Planning Journal (WG&L)...
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      To die will be an awfully big adventure.—J.M. BARRIE, in Peter Pan
      A man should not leave this...
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Lessons learned from Vickie Lynn.

      (1) Always proofread the whole document you have drafted, and not...
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Teach your children well
Those who are famous often become so because they are rich. There have been numer...
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[pg. 8]

that the estate was simple and under usual circumstances might have been divided up in less than ...
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Of course, when anyone inherits money, they are more likely to be sued. Trouble was no different, and
shor...
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decedent is born, the child is presumed to be included in the will even if not specifically mentioned. A
r...
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      in the activities of Janie and Robert.


Suspicious minds can be useful

Elvis Presley was one of th...
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[pg. 12]

is likely that the franchise would have been worth much more today.

Lesson learned from Joe Rob...
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By most accounts, Brooke was not a very loving mother and had a strange relationship with her son.
Accord...
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Well-known in the world of tax-exempt organizations, this decision upheld the IRS's revocation of tax-
ex...
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Lessons That Planners Can Learn From Celebrity Estate Battles

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Lessons That Planners Can Learn From Celebrity Estate Battles

  1. 1. Page 1 of 11 Checkpoint Contents Estate Planning Library Estate Planning Journals Estate Planning Journal (WG&L) Estate Planning Journal 2008 Volume 35, Number 10, October 2008 Articles Lessons That Planners Can Learn From Celebrity Estate Battles, Estate Planning Journal, Oct 2008 CELEBRITY ESTATES Lessons That Planners Can Learn From Celebrity Estate Battles The lessons learned from the difficulties faced by celebrity estates are a reminder for estate planners to stop and consider the impact that thoughtful planning can have on the lives of those whom estate practitioners serve. Author: JASON S. ORNDUFF AND LAUREN J. WOLVEN, ATTORNEYS JASON S. ORNDUFF is a partner in the Private Client practice group at the law firm of Thompson Coburn Fagel Haber in Chicago. His practice focuses on the legal aspects of wealth transfer to the next generation, including estate planning, estate and trust administration, and transfer taxes. LAUREN J. WOLVEN is the Regional Trust Head with the Chicago office of Brown Brothers Harriman Trust Company, N.A., where she manages fiduciary and wealth management advisory services for the Midwest region. The authors have previously written and lectured on estate planning. [pg. 3] It is surprising that those best situated to put their affairs in order—the rich and famous—often pay so little attention to the details of their lives. The last decade, in particular, has seen our nation's headlines littered with articles about estate battles. Some of those most frequently covered in the media include James Brown, Brooke Astor and, of course, Anna Nicole Smith (aka Vickie Lynn Marshall). Is it really that these deceased celebrities (or their advisors) have done such a poor job, or rather, does the decedent's fame cause the media to turn these personal affairs into a publicity circus? As the dual- edged sword that is the Internet makes locating celebrity wills and the surrounding stories so easy, we decided to take a closer look at the estates of the rich and famous. With the mention of the Internet must come a disclaimer. While we have spent substantial time in an effort to convey the facts as accurately as possible, we are only as good as our sources. Much of the color commentary was obtained from popular news sources, and we cannot promise that the stories were not embellished for dramatic effect! Due to the nature of the topic of this article, it seemed appropriate to search for a famous quotation to start our analysis. There were too many perfect ones to select just one, so we have listed a few of our favorites, which we feel approach the proper themes for this discussion. When I pass, speak freely of my shortcomings and my flaws. Learn from them, for I'll have no ego to injure.—AARON MCGRUDER, cartoonist Boondocks file://C:Documents and SettingslwolvenMy DocumentsArticles and SpeechesLessons_T... 5/8/2009
  2. 2. Page 2 of 11 To die will be an awfully big adventure.—J.M. BARRIE, in Peter Pan A man should not leave this earth with unfinished business. He should live each day as if it was [sic] a pre-flight check. He should ask each morning, am I prepared to lift-off?—DIANE FROLOV and ANDREW SCHNEIDER, Northern Exposure, All Is Vanity, 1991 Although we approach this topic with a sense of humor, we recognize that any laughs come at the expense of someone's death. We are respectful of those who are departed and the loss their friends and family experience, and seek only to perform an intellectual analysis to avoid repeating the past. As [pg. 4] George Bernard Shaw is credited with saying: Life does not cease to be funny when people die any more than it ceases to be serious when people laugh. Ironically, George Bernard Shaw, the famous author and playwright, left his own estate battle upon his death in 1950. Apparently, Shaw was not fond of the erratic variations present in English spelling. Upon his death, he left £367,233 13s to fund the creation of a phonemic alphabet for the English language. The funding initially was insufficient, but that changed when the estate began to earn royalties from My Fair Lady (adapted from Shaw's Pygmalion). According to Wikipedia, 1 “the Public Trustee found grounds to challenge the will as being badly worded. In the end an out-of-court settlement granted only £8600 for promoting the new alphabet, which is now called the Shavian alphabet.” Oops! You mean I forgot part of the will? Vickie Lynn Marshall's will currently is the most notorious demonstration of failure to address important issues in a testamentary document. The problematic language of Vickie Lynn's will appears in Article I of the document following the recitation that she has only one child, Daniel. In a widely publicized tragedy, Daniel predeceased Vickie Lynn by five months. The language that creates controversy in the probate of Vickie Lynn's will reads as follows: Except as otherwise provided in this Will, I have intentionally omitted to provide for my spouse and other heirs, including future spouses and children and other descendants now living and those hereafter born or adopted, as well as existing and future stepchildren and foster children. Because the provision governing disposition of the estate provided only that the residue be held in trust for her “child” without providing any alternatives, Vickie Lynn's estate plan has a gaping hole. Making the omission worse is the fact that later portions of the will refer to “children,” exacerbating the confusion. For example, the single paragraph that describes the trust to be held for her child by Howard Stern, Esq. states: “to hold in trust for my child under such terms as he and a court of competent jurisdiction may declare, such that my children are distributed sufficient sums for the health, education, and support according to their accustomed manner of living....” Fortunately, a Los Angeles court remedied the omission by recently declaring that Dannielynn Hope, Vickie Lynn's infant daughter, is the sole heir to her estate. Dannielynn's inheritance will be placed in a trust with her father, Larry Birkhead, and Vickie Lynn's former attorney, Howard Stern, as the co- trustees. Courts are instructed to look first at the plain language of a will or trust document to determine the testator/grantor's intent from the words of the instrument. When attorneys are not careful to adapt boilerplate language to specially crafted terms of the dispositive provisions of a document, ambiguities and holes such as the one in Vickie Lynn's estate are the unfortunate result. file://C:Documents and SettingslwolvenMy DocumentsArticles and SpeechesLessons_T... 5/8/2009
  3. 3. Page 3 of 11 Lessons learned from Vickie Lynn. (1) Always proofread the whole document you have drafted, and not just the portions you have changed. Make sure the boilerplate is consistent with the rest of the document. (2) Do not draft rigid documents. Had Vickie Lynn's will simply contemplated that her children would be Daniel and any other children born to her or adopted by her after the date of the will, some of the courtroom drama following her death would have been avoided. (3) Keep in touch with your clients and make sure they update their estate plans. Aside from being a good business practice in general, staying regularly connected to clients serves their best interests. Periodically check in and find out whether there is a new child, a change in marital status, etc. Encourage clients to update their documents because having an outdated estate plan sometimes can be worse than having no plan at all. Short isn't always so sweet Chief Justice Warren Burger is one of the more famous members of the U.S. Supreme Court. Known for authoring opinions such as Swann v. Charlotte-Mecklenburg Board of Education 2 and Bob Jones Univ. v. United States, 3 Burger is considered one of the finer legal minds to occupy a seat on the Supreme Court. Unlike Supreme Court opinions, however, Chief Justice Burger's will was incredibly short. The will read as follows: I hereby make and declare the following to be my last will and testament. 1. My executors will first pay all claims against my estate; 2. The remainder of my estate will be distributed as follows: one-third to my daughter, Margaret Elizabeth Burger Rose and two-thirds to my son, Wade A. Burger; 3. I designate and appoint as executors of this will, Wade A. Burger and J. Michael Luttig. IN WITNESS WHEREOF, I have hereunto set my hand to this my Last Will and Testament this 9th day of June, 1994. [pg. 6] Many critics have cited the Chief Justice's will as an example of bad drafting, though that conclusion is not entirely fair. It may be that the Chief Justice was familiar with the statutes of the applicable jurisdiction and found the default rules regarding payment of taxes and the authority granted to the executors perfectly acceptable. News reports, however, indicate that Chief Justice Burger's failure to elaborate specifically on the tax allocations and fiduciary powers cost the estate thousands of dollars that otherwise could have been saved for his legatees. Lessons learned from Chief Justice Burger. (1) Even talented attorneys should have their estate planning documents reviewed by a competent and knowledgeable estate planner. If the latter describes you, get one of your peers to give your plan a quick proofread. (2) Outlining how taxes are to be paid and expressly providing a grant of powers to the fiduciary probably are good ideas. If the statutory defaults are acceptable and are intended to be applied without modification, it may be worthwhile to mention that intention in the will to avoid confusion and conclusions by third parties that a document is insufficient or poorly drafted. (3) Revocable trusts are useful. The privacy they offer may help prevent famous from becoming infamous. file://C:Documents and SettingslwolvenMy DocumentsArticles and SpeechesLessons_T... 5/8/2009
  4. 4. Page 4 of 11 Teach your children well Those who are famous often become so because they are rich. There have been numerous books written on transitioning wealth to children, and the estate battles of the wealthy are often a result of failure of a decedent to properly prepare the next generation to receive an inheritance. Henrietta (“Hetty”) Green is a prime example of failure to properly educate the next generation. Hetty Green was born in New Bedford, Massachusetts, in 1834, into a family of prosperous whalers. On her father's death in 1864, Hetty inherited the vast sum of $7.5 million. She married three years later and made her husband (who had wealth of his own) sign what amounts to a pre-nuptial agreement. Preserving the family wealth was important to Hetty. She managed her own finances carefully, investing in Civil War bonds when no one else would, and then later in the debt securities of railroads. She more than held her own in a very male-dominated world of Wall Street, and when she died in 1916 she left an estate valued somewhere between $100-$200 million, or about $2-$4 billion in today's currency. While the numbers might make it seem that Hetty was good with money, a case can be made for the opposite conclusion. Throughout her life, Hetty refused to pay for either heat or hot water in her homes. Every extant picture of Green shows her in a black dress, because it did not have to be laundered as often. Her oldest son Ned fell and broke his leg as a child, and, rather than take him to the hospital, Hetty set the leg herself in her kitchen. Poor Ned developed gangrene and lost his leg soon afterward. Hetty refused to live in Manhattan because the real estate there was too expensive. Instead, she spent her life in apartments in Hoboken and Brooklyn Heights. In her old age, she refused a hernia operation because it cost $150, and that decision may have hastened her death. Hetty's miserly ways earned her the title “The Witch of Wall Street,” and no less an authority than the Guinness Book of World Records lists her as the greatest miser of all time. Not quite the legacy we would want for ourselves or our children, and not quite the balance that being good with money (including understanding how to spend it) requires. Lesson learned from Hetty Green. It would be hard to put the lesson more eloquently than in the words of Henry Ford, from My Life and Work: We teach children to save their money. As an attempt to counteract thoughtless and selfish expenditure, that has value. But it is not positive; it does not lead the child into the safe and useful avenues of self-expression or self-expenditure. To teach a child to invest and use is better than to teach him to save. Didn't he read Cinderella? Marvin Middlemark, like Hetty Green, was good at accumulating wealth, but he was Hetty's polar opposite when it came to spending money. As the inventor of the “rabbit ears” television antenna, Middlemark lived a life of exotic expenditure, including maintenance of a chimpanzee that sometimes became intoxicated at his parties (it is rumored the chimp liked to polish off unfinished beverages left by unsuspecting guests) or answered Middlemark's door for guests. When Marvin Middlemark died in 1989, he left an estate worth approximately $5 million and a straightforward, and by all accounts, competently drafted and uncontested will. The problem was not his planning documents, but rather, his legatees. Marvin Middlemark's survivors included his widow, her son from a previous marriage, Richard Middlemark (who used the surname, but was never adopted by Marvin), and Marvin's son, Martin Mittelmark (using the original spelling of the last name). The newspapers reported file://C:Documents and SettingslwolvenMy DocumentsArticles and SpeechesLessons_T... 5/8/2009
  5. 5. Page 5 of 11 [pg. 8] that the estate was simple and under usual circumstances might have been divided up in less than a year. Due to Marvin Middlemark appointing Richard and Martin as co-executors, however, circumstances were anything but usual. In addition to allegations that the widow threw coffee in Martin's face, tried to choke him, planted guns and drugs in Martin's car, and deliberately stalled the estate, the widow engaged in on again, off again negotiations to purchase the residence from the estate. One New York Times reporter noted that there was difficulty selling the house because the widow's eight yipping dogs repelled brokers. That same reporter also noted that the house may not have sold due to an infestation of rats (attracted by animal feed from Middlemark's collection of pets and the shelter provided by discarded tennis balls littering the property). In the vein of Goodfellas, Martin received death threats involving engraved shotgun shells and mysterious menacing men driving Cadillacs. Even Martin's attorneys received death threats, and both of them reportedly increased their life insurance! The ultimate showdown came when Richard pleaded guilty to misdemeanor charges to avoid his trial on felony perjury and other charges. Richard had, it seems, bribed a former family caretaker to recant a prior affidavit alleging that Richard and his mother were secretly selling off items of the estate. A public official (executive assistant to the Supervisor of New Hempstead), Richard lost his job and his co- fiduciary position, and received a two-year jail sentence for his behavior. Lessons learned from Marvin Middlemark. (1) Always protect children from the wicked stepmother. As much as we all like to believe that there are good, loving bonds where blood relationships and relationships by marriage intertwine, healthy skepticism may serve clients best. Middlemark's estate might have had fewer troubles if an independent party had been named as the fiduciary. (2) Specific directions regarding the disposition of real estate, particularly where there are stepchildren involved, can be helpful. Much of the dispute over Middlemark's estate appears to have revolved around the proper disposition of the home or the sale price to the widow. That issue could have been resolved easily if it had been addressed specifically in the estate plan. Dog is man's (or woman's) best friend Leona Helmsley was a real estate investor whose awful behavior earned her the title “Queen of Mean.” She was also known for stating quot;We don't pay taxes. Only the little people pay taxes.quot; Apparently, even the big people get locked up, as her disregard of the Internal Revenue Code landed her in prison for tax evasion. When Leona died in 2007, the major newspapers across the country ran headlines about her dog. The eight-year-old Maltese, Trouble, was left to the care of Leona's brother with a $12 million trust fund to subsidize the care. Headlines like “Top Dog” and “Lucky Dog” did not really do justice to Leona's estate plan, however. Her will is a thoughtful document that leaves $12 million in trust for Trouble (reduced to $2 million by the New York courts), but it also leaves substantial sums to her brother and two of her four grandchildren. Each grandchild received $5 million outright plus $5 million in trust. Leona's brother received $5 million outright and $10 million in trust. The language of Leona's will also clearly indicates that she had specific reasons for disinheriting two of her grandchildren. Perhaps the most unusual portion of the will is the one that revokes the trust fund set aside for the two legatee grandchildren if they fail to visit the grave of their deceased father each calendar year. file://C:Documents and SettingslwolvenMy DocumentsArticles and SpeechesLessons_T... 5/8/2009
  6. 6. Page 6 of 11 Of course, when anyone inherits money, they are more likely to be sued. Trouble was no different, and shortly after Leona's death, a former housekeeper was threatening in the press to sue Trouble for several dog bites earned by the housekeeper during her tenure at the Helmsley home. And what about the pets not owned by Leona? That is exactly the question a news story asked following the announcement of Trouble's luck. The attention brought to Trouble by the inheritance also brought some focus to those animals whose owners do not provide for them in their estate plans. These pets may soon have no worries either, as Leona left a mission statement directing use of her reported $5-$8 billion charitable foundation for the care of dogs. It remains to be seen how the courts will address this issue. Lessons learned from Leona Helmsley. (1) With clear drafting, even unusual provisions in an estate plan may be implemented according to the decedent's wishes. (2) Providing for pets in an estate plan is not a bad idea, but have regard for legal restrictions on the amount of funds. Pets left without a care plan may be euthanized if there is nobody to give them a home. (3) Bequests may be used to draw attention to a charitable or social cause. [pg. 9] Papa's got a brand new (wife?) The Godfather of Soul, James Brown, died on Christmas Day 2006, leaving behind a will that left the bulk of his fortune to family trusts set up for the benefit of his grandchildren and the “I Feel Good” Trust for the education of needy children in Georgia and his home state of South Carolina. James's acknowledged children have filed an action contesting the will. Complicating matters, however, is the question of whether James was married at the time of his death. James was married at least three times, to Velma Warren (1953-1969, divorced), Deidre Jenkins (1970-1981, divorced), and Adrienne Louis Rodriquez (1984-1996, predeceased him). From these and other relationships, James had five sons, four daughters, eight grandchildren and four great- grandchildren at the time of his death. There is some question, however, as to whether or not James was actually married a fourth time, to Tomi Rae Hynie. According to reports, James married Tomi in December 2001. It appears, though, that the marriage might not have been valid on the basis that Tomi may still have been married to another man, Javed Ahmed, a Pakistani national, whom Hynie claimed married her for a green card in an immigration fraud. According to James's attorney, Buddy Dallas, James was unaware of the marriage to Javed at the time James married Tomi. When he later found out, James was very angry. Tomi moved to annul her marriage from Javed and was successful, but the annulment did not take place until April 2004. No remarriage took place between Tomi and James after the annulment, so it appears under South Carolina law that they were not legally married. In legal filings in South Carolina, however, Tomi has identified herself as the surviving spouse of James. The first fight between Tomi and James's family was over the burial. More than ten weeks after his death, his children and Tomi finally decided on a temporary burial spot, and James was buried in a crypt at the home of his daughter, Deanna Brown Thomas. There has been high drama in this affair. Tomi was legally barred from James's home following his death, even though she was living there at the time of his death. Marriage troubles are not the only story in this estate. There is also the question of a five-year-old son of James and Tomi, who was never mentioned in his father's will. James's will was prepared prior to the birth of this child, but South Carolina law provides that if a will is prepared before a child of the file://C:Documents and SettingslwolvenMy DocumentsArticles and SpeechesLessons_T... 5/8/2009
  7. 7. Page 7 of 11 decedent is born, the child is presumed to be included in the will even if not specifically mentioned. A recent paternity test allegedly confirms that James was the father, but the results have yet to be admitted in court. The case continues in probate court. Lessons learned from James Brown. (1) If there is any question as to the legality of a marriage, affirmative steps should be taken if the intention is to be married, including perhaps going through the ceremony again. (2) If the five-year-old boy is James's son, he probably will be able to take under the will. Even so, it generally is a good idea to state specifically in the will or trust that the intention of the testator is to provide for all children, including those born after the creation of the document. If there is concern about paternity, the estate plan could require testing to prove a blood relationship to the decedent. So—uh, are you experienced (in managing an estate)? James (Jimi) Marshall Hendrix died on 9/18/70 at the age of 27. For the four years prior to his death, he was regarded as one of the greatest guitarists of all time. He was also well known for his drug use, which eventually caused his death. Only age 27 when he died, Jimi likely expected to live for many more years and he never prepared an estate plan. Therefore, Jimi died intestate. Sadly, the legal maneuvers regarding his estate lasted far longer than he did. For approximately 20 years after his death, Jimi's estate was managed by a California attorney, Alan Douglas. Jimi's father, Al Hendrix, eventually sued and won the right in 1995 to have outright control over Jimi's music. Al thereupon created multiple trusts and business entities to manage Jimi's music, image, and memorabilia. The real story about Jimi's estate gets more complex following the death of Al Hendrix in 2002. By that time, Jimi's estate was worth approximately $80 million, and Al left the entire fortune to his adopted daughter, Janie. Janie was the daughter of his second wife, whom he married in 1968. Al actually cut his other son, Leon (Jimi's brother), out of his estate plan. Leon sued to overturn the will on the ground that Janie had manipulated her adoptive father into disinheriting Leon and Leon's children. Leon also alleged that Janie and a cousin, Robert Hendrix, were mismanaging the estate and abusing the trust funds. There was even an allegation that Janie had spent $1.7 million on a credit card and charged it to the estate. The probate court held that Janie did not unduly influence Al. Leon was a habitual drug user and had [pg. 10] previously threatened litigation against Al, and the court found this was reason enough for Al to change his estate plan to exclude Leon. Still, the judge ruled that Janie and Robert had in fact mishandled some of the finances of the main company, Experience Hendrix, and replaced them with an independent trustee. Lessons learned from Jimi Hendrix. (1) Even young people can die, and it is important that anyone who has begun to accumulate wealth, even a single person without children, should have an estate plan. While it is likely that Jimi's estate was not worth as much at his death as it was later on, a simple will might have put Al in charge of the estate in the beginning. Furthermore, Jimi could have used the opportunity to provide for other relatives or create foundations. (2) Planning for the right party to be in control of an estate is incredibly important. It is unlikely that any action Al could have taken would have prevented his son, Leon, from suing to overturn Al's will that disinherited Leon. An independent trustee or co-trustee, however, might have reined file://C:Documents and SettingslwolvenMy DocumentsArticles and SpeechesLessons_T... 5/8/2009
  8. 8. Page 8 of 11 in the activities of Janie and Robert. Suspicious minds can be useful Elvis Presley was one of the best known entertainers in American history. Thirty years after his death on 8/16/77, people continue to impersonate him, and some people even believe that he is still alive. While Elvis was a highly successful entertainer whose estate was valued at almost $5 million at his death, his only assets were Graceland and the royalties from certain post-1973 recordings. The royalty rights to more valuable pre-1973 recordings had been sold to RCA Records, and his right to publicity had been sold to a company called Box Car Enterprises which was controlled by Elvis's manager, Colonel Tom Parker. Elvis's father, Vernon Presley, was named as executor of the estate, but he died in 1979. Elvis's ex-wife, Priscilla Presley, became the estate's executor on behalf of Elvis's only living heir, his daughter Lisa Marie. Some tremendous business errors had been made along the way during Elvis's life, and his estate also was hit with a significant estate tax bill. Nevertheless, what happened next was a success story for the Presleys. Priscilla, rather than handling the administration of Elvis's estate herself (as so often seems to be the case when relatives of celebrities become executors or trustees), turned over the management of the estate to experts who went out to secure the estate's property. This professional team was able to reacquire Elvis's right of publicity and took at least 24 cases of infringement to trial. As of 2001, the estate was worth more than $75 million and was earning $15 million annually. Lessons learned from Elvis Presley. (1) The most important lesson learned from the Presley estate is that of professional estate management. Although professional management can be expensive, in certain situations (particularly those involving the handling of unusual assets or dealing with discord among family members), professional managers can bring more certainty of loyalty, impartiality, and prudence in administration. (2) Professional managers can take the emotion out of estate administration. If Priscilla had sought to undertake management of Elvis's estate by herself, or if she had continued to use many of the insiders that Elvis himself had used, Elvis's legacy might not have been protected and the estate might not be worth what it is today. IRS recovers Robbie's fumble Joseph Robbie is the poster child for the importance of proper estate tax planning. Because he failed to properly plan for estate taxes, the Robbie family was forced to sell the Miami Dolphins. Joe Robbie came from a modest background in South Dakota. A successful trial attorney, Joe decided in 1965 to purchase an AFL professional football franchise based in Miami, which after a naming contest became known as the Miami Dolphins. A few years later, the Dolphins (and every other AFL team) joined the National Football League as members of the American Football Conference. Although it was a young franchise, the Dolphins had the only perfect season in NFL history in 1972 and won the Super Bowl in 1973 and 1974. Joe's intention had always been that his family would continue to own the Dolphins at his death. To that effect, Joe prepared an estate plan that contemplated maintaining ownership of the franchise in the family. Unfortunately, Joe never prepared for the payment of estate taxes. Joe died on 1/7/90. His wife was his sole beneficiary, so no estate tax was due on his death. When Joe's widow died shortly thereafter, however, the estate tax assessed against her estate was approximately $47 million. Though asset rich, the Robbie family was cash poor, necessitating the sale of the team and stadium to an outside buyer for $138 million. Had the Robbie family been able to hold on to the Dolphins, it file://C:Documents and SettingslwolvenMy DocumentsArticles and SpeechesLessons_T... 5/8/2009
  9. 9. Page 9 of 11 [pg. 12] is likely that the franchise would have been worth much more today. Lesson learned from Joe Robbie. It is often said that the estate tax is a voluntary tax. The Robbie story is a classic example of the generally avoidable worst consequence of the failure to respect the taxing authorities. Joe would have done well to treat his estate plan like football and heed the words of Vince Lombardi, his contemporary and coach of the Green Bay Packers: Football is like life, it requires perseverance, self-denial, hard work, sacrifice, dedication and respect for authority. You bet your life Julius “Groucho” Marx was one of America's most beloved comedians. He had a long career that spanned several decades on stage, in movies and in television. Groucho was known for his ability to ad lib humor, something he did frequently when he hosted a game show on television called You Bet Your Life. Unfortunately for Groucho, his quick wit started to fail him several years before his death as he sank into dementia. During this time, he was living with Erin Fleming, a relatively unknown actress with whom Groucho had a relationship, although she was never his wife. Groucho became very dependent on Erin near the end of his life, and Erin controlled all of Groucho's public appearances and access to him. Eventually, it became obvious that Groucho was no longer capable of managing his affairs and making decisions for himself. A nasty court battle ensued between Erin, who alleged that Groucho wanted her to take care of him, and Groucho's family, led by his son, Arthur, who argued that Erin had been abusing her relationship with his father for her personal benefit and had even threatened Groucho with physical harm. A court found for the family. When Groucho died, the probate court even went so far as to order Erin to reimburse the estate $472,000 it found she had converted. Lessons learned from Groucho Marx. Interestingly, an article in the 2/4/87 Wall Street Journal suggested that the lesson to be learned from Groucho Marx is the importance of planning for disability so that the disabled person, rather than a court, can decide who should handle the affairs of that person upon mental disability. In this case, however, it seemed clear to the court that Erin was abusing her relationship and stealing from Groucho. Had he signed a power of attorney naming her as agent, what might she have been able to do before a court could step in? Also, if Groucho had created a living trust and named Erin as successor trustee upon his disability, Erin's actions might have been much more cloaked in secrecy. The better lessons to learn from Groucho Marx are the following: (1) Watch the company you (or your clients) keep. The elderly, especially those with apparent strained relationships with family, are vulnerable to opportunists. (2) Documentation is particularly important where there are tense relationships. If Groucho truly wanted to make sure Erin was cared for, written documents evidencing that intent might have avoided the litigation in this case. [pg. 13] Money can't buy me love (but it can attract greedy relatives) For several decades, Brooke Astor was prominent in the New York media society pages. She also lived to age 105, a notable accomplishment. For several years prior to her death, not including the last two years of her life, Brooke's fortune and person were managed by her son, Anthony Marshall. Brooke was only 17 when Anthony was born, which meant that Anthony was 88 at Brooke's death. file://C:Documents and SettingslwolvenMy DocumentsArticles and SpeechesLessons_T... 5/8/2009
  10. 10. Page 10 of 11 By most accounts, Brooke was not a very loving mother and had a strange relationship with her son. According to reports, Anthony seemed to both love and loathe Brooke. As Brooke advanced in age, Anthony began to oversee her affairs. He took over direction of her staff and properties, paid himself an exorbitant amount of money to act as fiduciary, and invested much of his mother's money in theatrical productions. Anthony's son, Philip, was the person who filed suit and successfully had Anthony removed as Brooke's guardian. Annette de la Renta, the wife of designer Oscar de la Renta and a friend of Brooke, was appointed as the successor guardian. Philip's suit was supported by affidavits signed by many of Brooke's prominent friends, including Annette, Henry Kissinger and David Rockefeller, as well as members of Brooke's own staff. These affidavits reported that Brooke was being clothed only in a torn nightgown, was sleeping on a urine-stained couch, and was kept in her room for days on end. There were also allegations that Anthony discouraged outside advisors from sending financial records and documents to Brooke, stating she would not understand them. Philip argued that Anthony did not want the records to go to Brooke because she would not have approved of Anthony's selection of investments, especially the theatrical productions. On 11/27/07 (three months after Brooke's death), criminal charges were filed against Anthony and attorney Francis X. Morrissey, Jr., alleging mishandling of Brooke's money and possible forgery of her signature on amendments to her estate plan that would give Anthony a bigger share of Brooke's nearly $200 million estate. Lesson learned from Brooke Astor. If the evidence supports the allegations, this case will prove to be another example of financial abuse of the elderly. Such abuse can come from within or outside the family, but in virtually all cases there is a similar pattern—a single person has almost absolute control over an elderly person and that person's affairs with no real oversight. A system of checks and balances is crucial to preventing ongoing abuse and mismanagement. Conclusion Although most of the lessons learned from the celebrity estates mentioned in this article are not new concepts, it is always good to stop and remember the impact that thoughtful planning can have on the lives of those we serve. Many of the difficulties in these celebrity estates were due to human nature and not technical errors. Failing to pay attention to the impact of “real life” on an estate plan and to endeavor to mitigate the negative influences of the human players, however, is the difference between a technically adequate estate plan and a great estate plan. PRACTICE NOTES In virtually all cases of financial abuse of the elderly, there is a similar pattern—a single person has almost absolute control over an elderly person and that person's affairs with no real oversight. A system of checks and balances is crucial to preventing ongoing abuse and mismanagement. 1 Www.wikipedia.org, visited 1/3/08. 2 402 US 1, 28 L Ed 2d 554 (S.Ct., 1971). This decision supported busing of students to reduce de facto segregation at the schools. 3 52 AFTR 2d 83-5001, 461 US 574, 76 L Ed 2d 157, 83-1 USTC ¶9366, 1983-2 CB 80 (S.Ct., 1983). file://C:Documents and SettingslwolvenMy DocumentsArticles and SpeechesLessons_T... 5/8/2009
  11. 11. Page 11 of 11 Well-known in the world of tax-exempt organizations, this decision upheld the IRS's revocation of tax- exempt status for one private school and denial of such status for another private school, both of which did not have racially neutral admissions policies. © 2009 Thomson Reuters/RIA. All rights reserved. file://C:Documents and SettingslwolvenMy DocumentsArticles and SpeechesLessons_T... 5/8/2009

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