A Litigator’s Snapshot Perspective On Probate, Guardianship, And Trust Disputes
© 2006, Rodney J. Mason
THE ROLE OF PLANNING IN
REDUCING THE SCOPE AND
INTENSITY OF DISPUTES
Families feud over a little and a lot. These fights take place during the lifetime of the owner of the assets and after the person dies. The feuds show up in the guardianship and conservatorship setting, the probate setting and in the trust litigation setting. Although the struggle may center on money, on heirlooms or tiny baubles, or on who is in control, it generally involves issues of who it was that mother or father loved most. Many of the most heated issues involve events that occurred years or even several decades earlier.
I want to mention a few well-known and not so well-known examples and then briefly discuss new approaches which attorneys and other professionals are taking to avoidance or mitigation of these disputes. In this article, I do not discuss specific solutions or devices used by professionals. There are many journal articles and other CLE courses which address specifics. Instead I want to focus on some of the approaches which are emerging in this area.
In New York City we have the story of Brooke Astor, the millionaire heiress, who has given away $195,000,000 during her lifetime. She is 104 years old. This past summer and fall the New York Times had article after article about the feud between her grandson and her son over who would take care of her and her millions. The grandson accused his father, Brooke Astor’s son, of neglecting the care of Mrs. Astor “while enriching himself with her wealth.” New York Times, November 9, 2006. It is a story of greed and human frailty.
Her son, now in his 80s, stepped down. The handwriting expert hired by her court-appointed guardian concluded that a recent change in her will included a forgery of her signature. Although her son, of course, denied wrongdoing, he agreed to give back millions to her court-appointed legal guardian. He also agreed to pay his mother’s guardian $1.35 million to cover taxes, penalties and interest incurred by Mrs. Astor because of his failure to properly conduct his mother’s affairs. If you conduct a Google search with the name, Brooke Astor, you will be given a long laundry list of articles about one case. If you prefer you can click on the following URL and see for yourself right now. Or you can copy the URL and paste it into your browser. http://query.nytimes.com/search/query?query=brooke+astor&srchst=nyt&d=&o=&
v=&c=&sort=newest&n=10&dp=0&daterange=full&frow=9 and see the first page of the search list.
Minneapolis conservatorship attorney, Robert McLeod of Lindquist and Vennum regularly states that there are three reasons for conservatorships:
•1. An individual with delayed mental developmental reaches majority and needs assistance and protection in conducting his affairs.
•2. An elderly person is alone and lacks a social support as mental and physical capacity wanes.
•3. Someone is stealing the money.
Entire seminars are held on the subject but suffice it to say that in Minnesota, the courts are highly alert to the potential for trusted relatives or advisers to take financial advantage of vulnerable persons. In our recent history we have a sitting Court of Appeals judge and a professional conservator who have gone to prison as a result of taking money from their conservatees.
In Minneapolis, we have the story of James Binger, the theater titan who died on November 3, 2004. Read about the fight over his millions between his heirs and his beneficiaries, charitable and otherwise, over his estate in the Star Tribune article entitled “James Binger’s family, lover square off.” Minneapolis Star-Tribune, January 7, 2006. At an early hearing the Court looked out over a courtroom full of attorneys who appeared to be heard on the matter and opined that half of the Minnesota State Bar was there to be heard on the matter.
The State of Minnesota was a major unintended beneficiary of Mr. Binger’s estate because a change in beneficiaries from a charitable beneficiary to an individual beneficiary resulted in payment of inheritance tax on the order of $112,000,000, enough to put the State budget into surplus territory. The IRS got its share as well.
It not necessary to have a lot of money for people to feud with their children, their siblings and outsiders. I have a client who recently brought me her grandmother’s will. The will, written when the woman was in her eighties, disinherited her only child, saying that 30-40 years earlier, her daughter had damaged her house, her furniture and her car, never repaid her, and otherwise nearly ruined her. She cited King Lear, Act I, Scene iv, and left her daughter nothing but the funeral plot and a set of dishes. The will was admitted to probate and the whole world can now get a small glimpse into the bitterness that haunted that family’s life for 60 years. On a side note, Shakespeare’s King Lear is a great account of inheritance issues that is instructive to all families, not to mention their professional advisers.
Professionals from many different practices are trying to come up with a different approach to avoid the expenditure of many thousands of dollars in resolving a dispute that was not addressed before someone’s death and to come up with ways of mediating these disputes when they arise. In a recent Wall Street Journal article entitled “Family Peacemakers Aim to Avert Feuding Over Money in Estates,” Rachel Emma Silverman describes some of the efforts and initiatives underway to lessen the bitterness and the costs of these disputes. You can read about it by clicking on the following URL or by copying it and pasting it into your browser:
Financial advisers, attorneys, CPAs and others are working on solutions. Many of these come from the financial industry who are looking for a way to approach and motivate clients to plan and invest in the aftermath of the changes in the estate tax. Last weekend I attended a seminar on these planning issues, particularly as it relates to family business planning. It was sponsored by Seattle University and was attended by members of family businesses as well as lawyers, accountants, financial planners and other advisers.
This week in the mail I received a complimentary issue of Time which was sponsored by a major player in the financial services sector which featured new approaches to the issues of planning, namely, values, legacy planning, charitable planning
The Christian Science Monitor had a recent article about one of these solutions. Called “How to Beat the Midas Curse,” You can read it by clicking the following URL or copy it and paste it into your browser: http://www.csmonitor.com/2006/0313/p12s01-wmgn.html. Another example is the Legacy Study conducted by Allianz Life Insurance Company. This study traces the shifts in attitudes toward inheritance among baby-boomers and talks about the differences in motivation for estate planning from a tax-planning emphasis toward other factors which alternatively create roadblocks to effective planning. You can read about the study at http://www.allianz.com/azcom/dp/cda/0,,1004038-44,00.html.
Another resource is the recent book, Creating the Good Book, by Elizabeth Arnold, Portfolio Press, 2005. These examples are but a sampling of the many efforts that are proceeding to alter the estate planning and dispute resolution process.
LAWYERS’ INITIATIVES AND RESOURCES
The article in the Wall Street Journal on October 21, 2006 refers to the subcommittee of the Real Property, Probate and Trust of the American Bar Association on the Emotional and Psychological Aspects of Estate Planning. This subcommittee has monthly phone conferences for members who include not only lawyers but also psychologists, financial planners, accountants and others who are all involved in interdisciplinary approaches to look at estate planning issues.
There is also the Minnesota Probate and Trust Section which has a newsletter and other resources for addressing these issues. The purpose of my remarks is merely to sketch out the issues and to suggest that there are numerous resources available for dealing with these issues.
As professionals we encounter our clients at different stages of their lives and at different stages of their planning processes, if any. Sometimes we don’t encounter them until the situation has become difficult if not dire. We also encounter different motivations and tactics. We still have choices within the framework of client autonomy and independence that allow them to undertake constructive approaches to the extent possible. As litigators we try to make things better. We should avoid making things worse. The risks faced by our clients constitute an opportunity for us as professionals.