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Millionaire's estate planning offers lessons to Minnesotans

Minnesotans considering trust litigation may want to consider the case of a wealthy polo club owner. The entrepreneur established an irrevocable trust naming his two biological children as beneficiaries. He also appointed a wealth management firm to oversee the administration of the trust. Because the trust is irrevocable, the polo club owner has no authority to remove the wealth management company as trustee. Claiming to have lost confidence in the company's management, the entrepreneur elected to adopt his adult girlfriend in order to make her a beneficiary of the trust. Through this adoption, the entrepreneur gave his 42-year-old girlfriend the legal authority to challenge the administration of the trust and potentially replace the wealth management firm with a new trustee.

The unconventional adoption is now being challenged by an attorney appointed to serve as guardian ad litem for the entrepreneur's children. The guardian for the children will represent their interests in the trust assets, and is now seeking to gain access to the irrevocable trust as a source of claim payment.

The guardian, who is an attorney, argues that the entrepreneur's adopting his girlfriend is unfair to the biological children, since the trust is now divided among three beneficiaries, dramatically cutting each child's share of the trust assets.

As a general rule, only a person with an interest in a trust can bring legal action against a trustee. Because a trustee owes a legal duty to act in the best interests of trust beneficiaries, many lawsuits against trustees are founded upon a claim for breach of fiduciary duty. Often, these lawsuits seek to either remove the trustee or demand an order directing the trustee to perform in a particular way.

In the case of beneficiaries who are minors, any legal action must be brought through a parent or legal guardian. In any event, the entrepreneur's unusual circumstances highlight the importance of carefully choosing an experienced probate attorney to help with the complex issues posed by estate planning.

Source: nbcmiami.com, "Children's guardian disputes Polo founder's adoption of girlfriend," Karen Franklin, Feb. 10, 2012

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