Trial & Heirs™ » disinherited

Farrah Fawcett’s Trust Provides A Good Lesson

andrewwmayoras — Fri, 20 Nov 2009 02:56:02 +0000

It’s been widely reported across various websites in the last couple days that Farrah Fawcett’s will has been revealed and it “shockingly” disinherited her longtime ex-boyfriend Ryan O’Neal (father to her son, Redmond). These reports are wrong on several levels.

First, the document was her Trust, not her will. You can read it here, courtesy of Radaronline.com. This is an important distinction. Wills are public records and must always be filed in probate to be effective, which allows anyone interested to read them. Trusts, on the other hand, are private documents, normally kept out of court and the public eye.

As I wrote in this article this past July, the contents of Fawcett’s Trust were leaked by an anonymous “source” then, and now the whole trust document has been revealed. This is unusual. Normally that is one of the primary reasons why trusts are used, to keep affairs private (and out of probate court).

As the source previously leaked to the media (and as covered in my article on this blog in July), it was revealed then that Ryan O’Neal was not a beneficiary. So the recent exposure of the trust document is nothing new on that front. O’Neal said publicly that he was not surprised and had discussed with Fawcett that their son Redmond would be the biggest beneficiary.

So what did the trust reveal? The real surprising part here isn’t that O’Neal was omitted (ex-boyfriends aren’t usually included in a trust). Rather, to me, there were far more surprising elements, including that another of Fawcett’s ex-boyfriends, Gregory Lawrence Lott, received $100,000. Further, her artwork was left to the University of Texas, her other personal property, including her household furnishings and vehicles, went to her nephew (who also received $500,000 outright), and her father received a trust fund of $500,000, from will benefit him while he is alive. Fawcett’s charitable foundation is also a prominent beneficiary.

Who will manage this trust? Fawcett’s business manager and producer, Richard Francis. He will be charged with the difficult task of overseeing these bequests — and more importantly — the trust fund established for Fawcett’s troubled son, Redmond.

It has been widely reported that Redmond has struggled with drug addiction for years. Fawcett obviously knew this when she created this particular trust document on August 9, 2007. So, instead of leaving him money outright, she left $4.5 million to be used for his benefit through a trust fund. When he passes away, what is left from that fund will go onto her charitable foundation.

The specifics of how this will work are a good lesson for others to follow when they have a beneficiary who is not ready to receive a chunk of change all at once. The trustee of the Trust, Francis, will be required to pay the income from the trust fund to Redmond — or apply it for his benefit — at least 4 times year, and as often as monthly. If this $4.5 million is conservatively invested to generate even a modest 5% return, this would mean almost $19,000 per month would be available for Redmond, without ever spending any of the $4.5 million itself.

Francis can also tap into the $4.5 million itself for Redmond, but only to the extent it is advisable for his health. This means the money (again, other than the interest earned) cannot be used for things like education, housing, etc. — only health. Clearly, Fawcett thought this through, because she gave the same trustee rights to use the trust fund money set aside for Fawcett’s father for many other needs beyond just health.

This trust provision allows Francis to carefully control the money so Redmond is benefited the best way possible. And, for a drug addict like he is reported to be, this means Francis can spend as much as he deems advisable for rehabilitation (which would clearly improve Redmond’s health), without paying anything directly to him for fear of it being spent on drugs, etc.

The only flaw I see in the plan is that Francis is obligated to pay the interest on Redmond’s behalf at least 4 times each year. This is still quite a significant sum of money to be spent on him, if his life isn’t in a position to benefit by it. Plus, it is odd that things like education and housing wouldn’t be included, but that appears to be what Fawcett wanted.

Often, in my law firm, we recommend crafting specific trust provisions for people with drug and/or alcohol addictions that requires them to prove sobriety before receiving money, or tying other specific strings to distributions of money so that this goal can be achieved (such as requiring payments for drug rehabilitation programs).

The beauty of properly-used trusts is that you can be creative and use conditions like this for all sorts of reasons, in addition to sobriety, including promoting hard work, maintaining good relationships, education, and many other goals. We explore how trusts can do this in our book, Trial & Heirs: Famous Fortune Fights!, which helps families learn from celebrity errors how to properly plan for their heirs.

Fawcett gets a lot of credit for using a trust the right way to protect her son and still allow him to benefit from her money. Too many rich and famous people don’t do this. For example, as we discuss in Trial & Heirs, celebrities such as Martin Luther King, Jr., Jimi Hendrix, Sonny Bono, and Howard Hughes didn’t even have wills, much less trusts.

Trusts are not just for rich people. Anyone with family members they want to leave money to when they die, but are worried what the money may do to them when they get it, should strongly consider creating a revocable living trust with the help of a good estate planning attorney.

Not sure how to find a good attorney? Click here for a new way to help you.

For more information about Farrah Fawcett, visit her Wikipedia page.

Posted by: Author and probate attorney Andrew W. Mayoras, co-author of Trial & Heirs: Famous Fortune Fights! and co-founder and shareholder of The Center for Probate Litigation and The Center for Elder Law in metro-Detroit, Michigan, which concentrate in probate litigation, estate planning, and elder law. You can email him at blog @ trialandheirs.com.

Bo Schembechler’s Son Sues His Stepmom Over Trust

andrewwmayoras — Tue, 17 Nov 2009 17:12:56 +0000

Glenn E. “Bo” Schembechler, Jr., is one of the most respected names in the history of college football. And, no, I’m not saying that just because I graduated from the University of Michigan (twice). He built one of the most successful football programs around, and it excelled for decades.

Coach Bo died of heart disease on November 17, 2006, at age 77. He was survived by his second wife, Kathryn, his son, Glenn III, and two children of his beloved first wife, Millie, whom Bo had adopted (a third adopted son died before him).

From an estate planning perspective, Bo did everything right to avoid a family fight after he passed. He created a living trust, which was quite detailed and left the income from his assets to his wife, Kathryn, passing from there to his son Glenn III (known as “Shemy”), and then onto his grandchildren and Kathryn’s grandchildren.

He chose Kathryn as his successor trustee to manage his trust after he passed. As part of this responsibility, Kathryn was required to furnish reports four times each year to Bo’s son, Shemy. Recently, Shemy sued Kathryn in federal court in Columbus, Ohio (home to the school which was Bo’s chief rival, which shall remain nameless here). Shemy alleged she hadn’t furnished the reports as required by the trust and Ohio law.

It appears, according to Shemy’s attorneys, that Kathryn hasn’t shared any financial information with him since Bo died almost three years ago. The lawsuit includes a letter written by Bo’s trusted financial adviser trying to convince Kathryn to turn over the information. According to the Complaint that started the lawsuit (which you can read here: Download Schembechler complaint), she failed to respond to the letter or other requests.

Usually, one of the big benefits of a living trust, when properly funded (as this one appears to have been), is that it reduces the chances of a family fight in court. But, that is only the case if the person names as trustee does what he or she is required to do. When that person fails to act properly, court proceedings like this one are the last choice of trust beneficiaries.

When that happens, it turns a private matter, public. When Shemy’s attorneys filed the lawsuit, they made the trust document a public record for the world to read.

Because of this, we now can read the trust agreement of Bo Schembechler, which is interesting. It shows that his trust leaves nothing to his two adopted children still living (although it does include the grandchildren of one of them). Yet, his widow’s grandchildren are named as beneficiaries in the trust, treated equally with Bo’s grandchildren. (Keep in mind that it’s possible Bo made other arrangements for those who were excluded, apart from the trust).

Due to Kathryn’s (alleged) secrecy, this information is now public. And an expensive court fight has started. It’s a good lesson for everyone left in charge of an estate or trust … don’t leave the other beneficiaries in the dark. It’s amazing how many family fights in court, after a loved one passes, are started for this very reason.

In the new book I co-wrote, Trial & Heirs: Famous Fortune Fights!, we explore other cases of rich and famous people that were started for this same reason (along with many other cases), including Martin Luther King, Jr. and Rosa Parks. We share specific ways that people who find themselves with the job of trustee or executor can avoid these types of court fights, as well as what rights beneficiaries have. And the first rule for those in charge is — don’t be secretive! Share information! How do you know what information to share or not share? When in doubt, ask a good estate attorney.

I’m guessing that Glenn Schembechler III didn’t want to take his stepmother to court. Indeed, he waited almost three years after his father died to do so, when he could have started this case three months after Bo died (assuming his allegations that no reports were provided are accurate).

Hopefully, for everyone involved in the Schembechler family, this lawsuit will be resolved quickly.

Katherine Jackson’s Shocking Change Of Heart

andrewwmayoras — Thu, 12 Nov 2009 09:42:51 +0000

The Michael Jackson Estate has been the subject of regular court hearings as Katherine Jackson battled for control over the last several months. She routinely objected to the decisions of the co-executors John Branca and John McClain. Recently, she hired a new attorney with the promise of taking the case in a new direction, as I discussed in this recent article about the Michael Jackson case.

Her case took a new direction, all right. She decided to drop her claim. That’s right, she stopped fighting and agreed to let the executors run the show without her.

Surprised? I was. And I was far from the only one. Here’s what a lawyer in the case said about Katherine Jackson’s change of heart, according to CNN:

“She has now reneged on her obligation to her family.” This same lawyer then said that it was “one of the most despicable displays” he’d ever seen in court. He even accused Katherine of colluding with the estate executors in a “secret deal”.

So who was this attorney representing? None other than Joe Jackson — Katherine’s husband of 60 years. Granted, they don’t live together, but obviously, he was taken aback about what happened.

And Joe and his attorney didn’t take it lying down. In fact, they filed their own petition to remove the executors, claiming they had a conflict of interest and failed to disclose to the court that Michael Jackson was in New York the date the will was signed, calling into question whether it is even valid.

But the judge ruled that Joe Jackson didn’t have legal “standing” to make that claim because he wasn’t a beneficiary. In other words, he had no horse in the race, so to speak, so he wasn’t allowed to try to remove the executors. The only ones who can do so are Katherine Jackson, the three children (who are minors — and they act through their guardian, Katherine), or the unnamed charities that so far have not been publicly revealed.

So, at this point, unless Katherine Jackson has another change of heart, or unless another beneficiary comes forward, the legal fighting may be at an end … at least in this court. Joe Jackson’s attorney has promised to appeal the verdict and try his luck in another court.

He did get one bit of good news. The judge allowed him to proceed with his request for a monthly allowance from the Michael Jackson Estate in the amount of $20,000/month. The judge hasn’t agreed to give him that yet, but at least he has the right to file a request for it.

Perhaps trying to pacify her now-angry husband, Katherine Jackson reportedly said she won’t contest his request for an allowance.

Wow this is getting interesting! And I have a feeling we haven’t heard the last of this issue. But, we’ll have to wait and see.

The Michael Jackson case shows how important the proper estate planning is for everyone. The better your legal planning, the less likely you’re family will fight over your money when you’re gone. So don’t delay; go see a good estate planning attorney now. Or your family may end up hiring probate litigation attorneys later.

And if you have a loved one in your family who doesn’t want to do estate planning, and you need help convincing him or her, here’s something that may help.

Leona Helmsley Charity Battle Rages On

andrewwmayoras — Tue, 10 Nov 2009 22:17:17 +0000

As I described in this article from February 2009, the trustees of the Leona Helmsley charitable trust asked the probate court in New York for permission to donate primarily to charities that helped people rather than dogs, despite some language in the trust that suggested she wanted her billions to benefits animal charities.

Specifically, the trust had a Mission Statement that included, as its first purpose “the provision of the care for dogs”. But it also gave the trustees discretion to benefit charities as they saw fit. This is a very important decisions for many charities (not to mention the people or animals they help) because we’re talking about several billion dollars.

This August, several different animal charities, including the Humane Society and American Society for Prevention of Cruelty to Animals, launched a legal challenge to the judge’s ruling to force the trustees to support animal charities. Reportedly, the trustees so far have donated very little to help dogs.

There was a big question whether these charities even had proper “standing” to bring this action (meaning whether or not they had the legal ability to challenge the judge’s ruling even though they were not named beneficiaries). So far, their challenge has been allowed to proceed.

In fact, a couple weeks ago, another animal charity — D.E.L.T.A. Rescue — filed legal papers in court asking to join in the fight. They issued a press release saying that Helmsley’s true wishes were to benefit dog charities and they complain the trustees are giving far too little to help dogs. They object that the trustees gave $136 million to help humans with only $100,000 helping an animal welfare mission.

The trustees of the Helmsley Charitable Trust have publicly responded to the allegations through their website, which you can read here. They feel that Leona Helmsley’s wishes were clear, and she really did want to primarily help people, not animals. They even point out that in the eight years between forming the charitable foundation and her death, Helmsley gave some $55 million to charities, but only one thousand dollars to an animal charity.

But this isn’t the only fight caused by Helmsley’s love of dogs. She left a $12 million trust fund for her dog, a Maltese named Trouble, while two of her four grandchildren got nothing. Those two filed a legal challenge to her trust, while the court was asked to slash Trouble’s inheritance.

What happened? And how can this story (and others) help those of us who don’t have billions? The new book, Trial & Heirs: Famous Fortune Fights!, has the stories and the information to benefit all families protect themselves from court fights . . . and help people know what to do when they’re in a fight. A free preview is available here.

Regardless of what happens with this fight about Leona Helmsely’s wishes, the moral here for the rest of us is that instructions in a will or trust need to be very clear so there isn’t confusion and fighting later. Did Leona want her trustees to donate more of her money to help dogs? Or did she really want them to decide for themselves? She could have been more specific in her trust and avoided this fight. The same rule applies to everyone planning how to pass their assets onto loved ones when they die.

Ike Turner Will Contest Ruling Is In

andrewwmayoras — Mon, 02 Nov 2009 21:39:42 +0000

The trial involving whether Rock ‘n Roll pioneer & legend, Ike Turner, left a valid will has ended. As described in this prior article I wrote, the case pitted his six children (two of whom apparently are now questionable children of his) versus his ex-wife versus his friend and “sometime” attorney. I’m not exactly sure why someone would be a “sometime” attorney, but that’s how he was described in this North County Times (California) article about the trial.

The children argued Ike died without a valid will, leaving all to them under California’s intestate laws. The ex-wife, Audrey Madison Turner, felt that Ike had left everything to her through a handwritten will written two months before he died of a drug overdose in 2007 (even though the couple was already divorced).

The “sometime” attorney believed a prior handwritten will in 2001 left him in control of Ike’s legacy. What was that legacy? While it appeared the estate was cash-poor, the victor would receive the rights to own and profit from some 4000 songs. That’s a lot of notes!

A few days ago, the judge issued his decision. He ruled that both wills may have been valid, but a later note written by Ike Turner had revoked the last will, which in turn had revoked the 2001 will. This meant the children were the big winners . . . at least so far.

The judge also granted all of the combatants a chance to appear in front of him again to try to change his mind. This is a rare step, especially given his first ruling came through a 16-page decision, issued two weeks after the trial ended. In other words, this was far from a snap decision, which means the likelihood of him changing his mind would be minimal.

So, while we can’t declare a final winner yet, the children surely had a good time celebrating this Halloween weekend. Of course, regardless of what happens after the next court hearing, there is likely to be an appeal. The losing side almost always appeals after trials like these. There are too many emotions at stake (not to mention dollars) to go away quietly.

Too bad Ike wasn’t better about documenting his wishes and avoiding a family fight. For some reason, court fights among heirs to famous musicians are common. Just ask the families of Michael Jackson, James Brown, Ray Charles, Jimi Hendrix, Jerry Garcia, and Whitney Houston (wait — she’s not dead yet, but she is involved in a fight over what her late father’s true wishes were).

All of these stories, and many more, are covered in the new book Trial & Heirs: Famous Fortune Fights!, co-written by Andrew & Danielle Mayoras. We use these stories to help make sure your family won’t end up the same way. We also teach you what to do (and not do) if you’re already in a fight.

It’s available at TrialAndHeirs.com.