As an estate planning attorney I help clients plan the legacy they will leave. Often it’s simple such as “I leave everything to my children….” Other times it’s a gift to an old friend, a church, or other charitable organization. I just read an interesting article, on ESPN.com, about the former University of North Carolina coach, Dean Smith, and what he did. He left, in his trust, a gift of $200 to each of the lettermen that played for him. According to the article it was approximately 180 of them! That $36,000 will mean a lot. To some of his former players it will be the sentimental value of it as obviously a billionaire, like Michael Jordan, doesn’t need another two hundred dollars. On the other hand there are probably a handful of his former players who are struggling through life and that $200 will be a huge infusion to their monthly budget. The bottom line is he is leaving his mark or his legacy! You can do that too! Here’s the link:
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….
I read about the Michael Jackson tax dispute with the IRS on a legit website but figured I would get better dirt on TMV so here’s the link to that article. Most of my readers understand that when a wealthy person dies their estate may have to pay an “estate tax” which is basically a death tax. It’s certainly due to the IRS for estates over $5mil and sometimes also due to the estate depending on what state the decedent lived in. Mr. Jackson lived in California so there is no state estate tax. Just the feds!
This dispute with the IRS is going to get good. Look, I am certainly not an asset valuation expert but for the estate’s advisors to suggest Mr. Jackson’s likeness has a value of $2,105 is sort of silly. I mean really I’ll give you $2,500 without even understanding what’s included in his “likeness.” The IRS values at $434 million. I imagine the realize is somewhere between those two extremes.
The estate could face significant penalties if they don’t solve this quick! Stay tuned….
The above is just one example. Read more on tmz. If you think you might have estate valuation issues let’s talk about it now to PLAN AHEAD and avoid the fights later!
It appears another celeb has died without a proper estate plan in place. He made a ton of money on the Fast and Furious movies and apparently led his life fast and furious! Here’s a link to a good article about this sad situation.
It’s amazing how poorly planned many celebs are. Thomas Kinkade’s estate debacle was yet another in a long line of messed up celebrity estates. The Sacramento Bee has reported that it has been settled privately. Here is a link to the article.
Sherman Hemsley is deceased… and just like the Jefferson re-runs will go on forever… his probate case may also. This is an interesting one and it clearly underscores the importance of a really good estate plan. Mr. Jefferson was a very successful businessman on the Jeffersons. My recollection is he made his money in the dry cleaning business. In fact, you may recall he was neighbors with bigoted Archie Bunker before he moved on up….
Fast forward 25 years and Mr. J is dead but a fight persists in probate Court!
His long time partner is battling against a brother who has come out of the woodwork and a distant cousin too. No matter how successful a person may be that doesn’t mean they get a good estate plan. He apparently died with a will but not a good one.
If you have family that may come out of the woodwork hire a good attorney and get your plan set up air tight!
Link to article on the Hemsley latest.
It seems that Katherine Jackson has a team of attorneys working on her behalf as Executor of the estate of her late son, Michael. The latest has to do with possibly wrongful use of the pop star’s copyrights after death by Howard Mann. I will paste the link to the article on Sacbee.com below. As a distant observer this estate continues to show you how NOT to do an estate plan. Here are a few observations of how you can do better than Michael:
1) have a trust;
2) put all your assets into the trust;
3) select a professional trustee.
Link to article here.
I find celebrity estates interesting because they often mess things up much worse than us mere mortals. However, it also is a good reminder that they are humans too!
I wrote recently about Adam Yauch of the Beastie Boys and his handwritten changes to his will. Other celebrities have left similar, or worse, handwritten wills. If memory serves Jerry Garcia of the Grateful Dead and also a US Supreme Court justice both left handwritten wills. Mr. Yauch’s was just partially handwritten… one phrase… and that phrase will likely cause years of litigation.
In any event today I am writing about the part of his will written by his lawyer. Clearly he and his wife did not see eye-to-eye on who should be guardian of their children. If the second death, between he and his wife, happened in an even year his parents were first choice to be guardian of the kids. On the other hand if the death was in an odd year then her parents were first choice for guardian. Sure it’s possible there was some good luck type thing involved but I think it was just a straight compromise.
Really it’s a great compromise. Why fight about it!? Just come up with a unique agreement! I like to think I am a creative estate planning attorney but I have never thought of this one before. However, I am sure I will have the opportunity to use it before long with some young couple!
When you get your will in place make sure you have guardians named for your minor children. Also it’s a good idea to have a living trust or testamentary trust to protect their assets. If you aren’t sure what to do please hire an experienced estate planning attorney.
I came across an interesting article in Forbes the other day about Adam Yauch of the Beastie Boys and a change he made to his will before death. Of course back in ’86 the Beastie Boys hit it BIG with the album Licensed to Ill which remains one of my top 5 favorite albums of all time; yes, I still call them albums. He wrote that his name was MCA and that he had a license to kill and that it was time to get ill. In any event, he was born and bred in Brooklyn of the USA and like a lime to a lemon he tried to write his own will… willl… willl.
His will (but not the trust the will pours over to) is a public record in the state of New York. It contained the following provision which is common for entertainers:
“Notwithstanding anything to the contrary, in no event may my image or name be used for advertising purposes.”
However, MCA, before signing the will, interlineated (added in) some extra words so that the will now reads as follows (his added handwritten provision is underlined):
“Notwithstanding anything to the contrary, in no event may my image or name or any music or any artistic property created by me be used for advertising purposes.”
It appears that Mr. Yauch may have inadvertently created a fight which could employ many lawyers to unwind. I always tell my clients not to write anything extra on their wills… and his lawyer likely told him the same. However, he also liked to put a pen to paper and write some def rhymes.
The problem gets into the difference between his public rights and his copyright rights. Mr. Yauch owned HIS publicity rights but his copyrights were owned by various entities including the Beastie Boys themselves (or a partnership by that name anyway).
Nobody knows exactly what he meant but my guess is the very publicly spiritual man probably didn’t want his likeness plastered on dozens of commercials and TV shows as so often happens (see Elvis or Michael Jackson). I have met with clients like this who just want their families to live a comfortable life on the millions he left and leave it at that. Keep things simple. However, he potentially cut off his family’s ability to have a voice in the use of his copyrights… and since he only owned a portion of the rights those songs will keep on playing.
Like a 12 inch single with an extended re-mix this song might play a while. I will post more information when I hear it.
I just read yet another article regarding Michael Jackson’s estate. His siblings are still suggesting the will is fake… two years after he died. However, how does that benefit them? If the will is invalid then the estate goes 100% to the kids. Michael’s money-grubbing siblings never get anything. Makes no sense and just seems OFF THE WALL to me!
Check the link here.