Crime Does Pay (especially when it comes to frivolous estate challenges)

Several years ago, a client came to me to help work out language to establish a restricted endowment for someone donating land to establish a camp – all nice stuff.  About year or two later, the client called and said that the donor has passed away.  The endowment agreement never was signed but the donor had done his estate plans without involvement of the charity.  The result: he left everything he had to this charitable organization, including the valuable land and more, around $15 million in total.  No strings, either!  Not that it mattered since the nonprofit knew the donor well enough to create a board restricted fund to meet the donor’s wishes posthumously.  All nice stuff until a long lost relative got notice that great uncle Charlie passed – and all of his money is going to charity, do you object?

So, the client asked me what they should do in the face of the challenge to the estate.  Apparently the donor’s attorney had done everything right, even a video of the client attesting to no undo influence and mental capacity.  Upon hearing these facts, my advice was to hire the largest, nastiest law firm in that state and instruct them to squash the other side.  Having had the misfortune of being in a small law practice and having run up against big law firms, I knew exactly the pain a large firm would put the challenging attorneys through.  Make is so not worth their time and money that they will walk away.  In any case, the charity’s bequest was completely solid – it was just a matter of time (they just didn’t want to wait years for the funds).

The client consulted with a top law firm in the state and lo and behold, they settled with the family – a few hundred thousand to send the great nephew off in style.

I found out that what would normally be considered a frivolous law suit (estate challenges only can be instituted by someone who would have received estate funds had the person died without a will – i.e. a next-in-line descendant), was actually a smart move.

For regulars to this blog, you should know my personal involvement and feelings regarding the Huguette Clark estate (search my blog for numerous posts on the topic).  So, when Bill Dedman’s email with a link to his latest piece on the Clark estate came through this morning, it wasn’t surprising.  The title says it all:  “Kin of heiress Huguette Clark in talks to receive share of $300 million estate.” Click the title if you want to see the article!

All not surprising – the whole story was a ruse from the start to squeeze some bucks out of the estate.  All of the accusations, negative stories about the estate attorney and accountant, the law suit against the hospital, all of it was for one purpose and one purpose only: how much money can we (the relatives who had nothing whatsoever to do with Ms. Clark) get out of the old lady – who to their chagrin lived to the ripe old age of 104 and only signed a will very late in the game.  Ironically and perhaps with divine justice, Ms. Clark outlived so many of the family who were to me scheming and planning and waiting to get her money (having squandered their wealth over the years).  It could have been billions of dollars, too, had her assets been managed professionally.

Here is a snip-it from the linked article that says it all:  “Fourteen of the 19 said in legal papers that they never met their reclusive aunt. The last time any of them recalled speaking with her in person was in 1957, although some said hello when their parents were on the phone with Huguette on holidays.”  I think they were stretching the truth even there.  Ms. Clark was a recluse and these “relatives” were descendants of her half-siblings (all of whom were adults when she was born) who probably didn’t appreciate their father’s new late in life family.

So what do walk away with from these stories?  The unfortunate reality is that estate challenges – from next-of-kin only – don’t follow the normal “frivolous law suit” standard that other legal cases do.  There is almost no way around it.  Planned giving fundraisers – do your best to make sure family knows what your donors are doing, keep good files and don’t be surprised when the family fights the will.  Usually it is the long lost nieces and nephews and other more distant relatives who fight the most.  No guilt about their parents, just greed and easy money.

5 comments

  1. Is a bad settlement better than a winning law suit? Unfortunately, too often. It is not so easy to recommend a scorched earth approach and few win frivolous litigation claims. What a choice to make: bad settlement or to spend significant dollars in a righteous manner?

  2. I have been involved in a number of these cases, ranging from “winner take all” (e.g. second will written, problem was donor was in a coma at the time) to “your charity is listed for X but the girlfriend, 40 years junior, who was only involved for the last six months of his life, wants your charity to accept 1/3rd of that amount.” We also see others involved with the estate seek to take far more than anything that would be considered reasonable because they assume a charity will not fight. I have, literally, been told by opposing counsel that he was sure our charity would not want the case to be in the media even though the entire case revolved around his clients attempt to steal assets. I assured him that I would love for this facts of the case to get broader attention. As the old saying goes, there is no honor among thieves (and charities are usually timid marks).

    1. I always assumed nonprofits were sitting ducks too – until I had a personal fight with one. They pulled the old “hire a large law firm” trick on a measily unemployment case!! Then I realized my mistake! I was fighting a law school run by an experienced lawyer, just my luck!! That was
      : it for my case. So you never know.

  3. Nice post. I learn something new and challenging on blogs I
    stumbleupon everyday. It will always be helpful to read through content from other writers and practice
    something from other websites.

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