Donald Sterling has a pretty large net worth. I don’t know if it’s $2 billion or $3 billion or what exactly it is. I think most of us estate planning attorneys would call him “high net worth.” I certainly don’t have any billionaire clients at this time. Anyway, he is probably busily working with a team of estate planning attorneys to figure out how he can retain control of the LA Clippers in light of his recent racist rampage that has gone public and gone viral!
When I think back to others who have gotten themselves into similar pickles I have thought of owners like Eddie Debartolo, of the 49ers, and Jimmy Haslam, of the Cleveland Browns. It is believed that both men utilized “blind trusts” so as to retain ownership of their beloved teams even if they did lose day to day control.
I actually found a great definition of a blind trust on wiki. It reads:
“A blind trust is a trust in which the fiduciaries, namely the trustees or those who have been given power of attorney, have full discretion over the assets, and the trust beneficiaries have no knowledge of the holdings of the trust and no right to intervene in their handling. Blind trusts are generally used when a settlor (sometimes called a trustor or donor) wishes to keep the beneficiary unaware of the specific assets in the trust, such as to avoid conflict of interest between the beneficiary and the investments. Politicians or others in sensitive positions often place their personal assets (including investment income) into blind trusts, to avoid public scrutiny and accusations of conflicts of interest when they direct government funds to the private sector. A blind trust is often used with those who have come across a fortune within a short period of time (e.g. an inheritance, or a multimillion lottery) in order to keep their identity anonymous to the public.”
The above sums it up pretty well. Donald Sterling could select someone (it’s best for it not to be spouse, parents, children and certain other related or controlled parties) he highly trusts to be the trustee and that person would make all the decisions over trust assets. For example, if it were me I would select a non-relative but perhaps someone he trusts more than a relative. Maybe he has a good friend (hard to believe of course) that he has been friends with since 1st grade. Someone like that could serve as trustee and, while technically independent, would probably do exactly what Donald Sterling asks him to do.
Other options to serve as trustee would be an accountant, an attorney or even a private professional fiduciary. However, I think the old friend would be best. Or possibly one of the immediate above as the trustee but then select the old friend as a co-trustee or “distribution” trustee who would need to be consulted in certain specific situations!? I am just giving ideas. Of course, there are other options to consider.
The key to the blind trust is that the NBA has to see, and believe, that Donald Sterling has absolutely no control over the team. However, even that might not be enough based on his racial blast, his follow up to the rant, and his history of troubles before this year!
Possibly by doing the blind trust set up the NBA wouldn’t mandate a sale next week!? I guess we shall see….