Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Friday, December 2, 2016

What Happens When Your Husband Hides His $400 Million Fortune?

Hiding moneySarah Pursglove decided to take a deeper look into her husband’s finances when the Finnish entrepreneur left her. Robert Oesterlund swore in court that his fortune only totaled a few million dollars, but Pursglove could think of several family purchases that cost above and beyond that amount. She flew to the Bahamas to figure out what her husband was really worth. There she found an accounting statement that claimed Oesterlund was worth at least $300 million. As she packed her bags for the flight back home, her family’s fortune immediately began disappearing into various shell companies, bank accounts, and trusts under a worldwide financial system catering to the ultra rich. The system effectively offshores wealth and makes the richest people appear to own very little.

Over the next two years, Pursglove would rely on her wealth squad to untangle the defenses of the offshore financial world. It all started when Oesterlund created his businesses and was subsequently looking to avoid costly taxes. Eventually, he set up a Cook trust, suggested by his corporate counsel, who assured him he would be “untouchable.” As Pursglove’s lawyers began to figure out the scheme her husband was surmounting, they filed court documents for a divorce and to impose a sweeping asset injunction, which would prohibit Oesterlund from selling, merging, or borrowing against any of his assets and additional offshoring. The corporate fraud lawsuit proceeded in Florida, where the family’s companies were being run. It was eventually discovered that Oesterlund was using a Bahamas-based company to transfer all his assets and avoid all United States tax liability—a tactic referred to as “transfer pricing.” Pursglove’s attorneys claimed that Oesterlund began to shield assets from his wife as the divorce loomed near. Shortly after a judge ruled that Pursglove could see thousands of her husband’s documents, both sides’ lawyers met and discussed the possibility of Oesterlund going on the run if he had to fork the documents over. Consequently, this brought things to a head. Oesterlund would have to expose himself or threaten his fortune. Oesterlund’s one-time allies were now becoming his enemies to avoid fighting the greater good—the system. The wall of secrecy around Oesterlund’s accounts began to crumble. The case still remains open and the outcome is unknown, but it begs the question: is there justice in wealth battling wealth?

See Nicholas Confessore, How to Hide $400 Million, N.Y. Times, November 30, 2016.

December 2, 2016 in Current Events, Estate Administration, Estate Planning - Generally, Income Tax, New Cases, Professional Responsibility, Trusts | Permalink | Comments (0)

Tuesday, November 29, 2016

Article on Third-Party Liability in Equity

Trustee2Sarah Worthington recently published an Article entitled, Exposing Third-Party Liability in Equity: Lessons from the Limitation Rules, Equity, Trusts and Commerce Ch. 14 (Forthcoming). Provided below is an abstract of the Article:

This article provides a re-examination of third-party liability in equity. The exercise was prompted by a difficult case on limitation periods in equity, but the conclusions – if correct – have far wider significance. Three major points are made. First, it has long been conceded that the language of constructive trusts and constructive trustees is confusing. It is suggested here that the language disguises a relatively straightforward search for situations where there are property splits (trusts) or property management responsibilities (fiduciary responsibilities). Secondly, accessory liability in equity looks to be something of a misnomer, since it appears that the drive is not to find individuals with particular associations with the wrongdoer and shared liability for the primary wrong, but instead to find individuals who are themselves trustees or fiduciaries because of their particular association with the original managed property. Liability follows accordingly, and is primary not secondary liability. Finally, where there are fiduciary responsibilities for property management, liability is in two forms: compensation for loss to the managed assets; and disgorgement of disloyal gains. The former is distinguishable from common law compensation in its focus on remedying loss to the property fund, not the loss to individuals interested in the fund. These insights – in particular the fiduciary characteristics of third parties in equity, and the workings of equitable compensation – have significant practical consequences.

November 29, 2016 in Articles, Estate Administration, Estate Planning - Generally, Professional Responsibility, Trusts | Permalink | Comments (0)

Trump to Put His Businesses in a Blind Trust

Blind trustDonald Trump is planning to put his business assets into a blind trust run by his oldest children. However, he does not plan to meet the legal definition of a blind trust due to the trust not being managed by an independent party and him possibly having his hand in some of the decision-making. If he were to set up a true blind trust, he would need to appoint an independent trustee and liquidate his assets. On the other hand, Trump will be required to disclose his assets under the Ethics in Government Act. 

See Debra Cassens Weiss, Trump Plans to Place His Businesses in a Blind Trust Run by His Children; Will It Resolve Conflicts?, ABA Journal, November 14, 2016.

November 29, 2016 in Current Events, Estate Administration, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Thursday, November 24, 2016

Robin Williams' Estate Plan Air Tight?

Robin williams2Robin Williams’ estate plan was fairly solid, but what fancy footwork did his lawyers have to do over the years to keep it from failing? Williams’ publicist disavowed the 2010 trusts that came to light, claiming they did not reflect his estate plan at the time of death. The trusts became public when a co-trustee passed away, creating a public issue for filling the hole in the line of succession. After these trusts became public and the gap was filled, the trustees did not waste time covering them up, which was presumably easy considering the decanting methods available. However, had Williams’ trust given the trustees power to appoint a replacement, there would have been no need to file a public appeal. With serious legal power on his side, Williams avoided several disasters in carrying out his estate. 

See Scott Martin, Robin Williams Hid His Assets After All, but Any ILITs May Have Backfired on His Planners, Trust Advisor, November 20, 2016.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

November 24, 2016 in Current Events, Estate Administration, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Monday, November 14, 2016

Prince's Estate Says No Deal with Jay Z for Recordings

Jay zPrince’s estate does not want to make a deal with Jay Z to acquire the late singer’s music catalog. His estate fired off a letter to Jay’s team, stating that it had no interest in signing a deal for “Roc Nation to exploit any of the intellectual property assets of the Estate.” Jay originally offered approximately $40 million for Prince’s unreleased tracks. Additionally, Prince’s estate is accusing Tidal, Jay’s music app, of making fifteen of Prince’s albums available for streaming without authorization, which surely hints that there is potential for an upcoming lawsuit. 

See Prince Estate to Jay Z: No Deal for His Recordings . . . Issues with Tidal Deal Too, TMZ, November 13, 2016.

November 14, 2016 in Current Events, Estate Administration, Estate Planning - Generally, Music | Permalink | Comments (0)

Tuesday, November 8, 2016

Article on Punitive Damage Awards Against Trustees

Puntiive damages trusteeSamuel L. Bray recently published an Article entitled, Punitive Damages Against Trustees?, Research Handbook on Fiduciary Law (2016). Provided below is an abstract of the Article:

This essay considers whether punitive damages should be awarded against trustees. It concludes that a satisfactory justification for awarding them has not been given. Seen from the rightful-position perspective, punitive damages fail to support the plaintiff’s forward movement to the rightful position. They are also inconsistent with the scope of liability in trust law. From the perspective of optimal deterrence, punitive damages would increase deterrence for those who need it least (risk-averse internalizers), and decrease deterrence for those who need it most (risk-seeking externalizers). From the viewpoint of law and equity, punitive damages in trust law would be an idiosyncrasy requiring an explanation, whereas no explanation is needed for their absence. Even if punitive damages were used selectively, they would likely be overused relative to the constructive trust. Indeed, the uncanny coinciding of the rise of punitive damages against trustees with the decline in American lawyers’ familiarity with the constructive trust raises the possibility that it is not greater knowledge, but greater ignorance, that led to the development. Whatever the reason for this rise, the best verdict that can be rendered for punitive damages against trustees is “not proven.”

November 8, 2016 in Articles, Estate Administration, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Sunday, November 6, 2016

Maurice Sendak's Estate Mostly Wins Legal Battle Over Book Collection

SendakMaurice Sendak’s estate has emerged mostly victorious in its legal battle with Philadelphia’s Rosenbach Museum and Library, which held many of his original drawings and part of his book collection before he died in 2012. In probate court, the judge awarded a bulk of the book collection to the Sendak estate. Sendak’s will specifically stated that the drawings and most of the loaned items to the museum would remain the property of the Maurice Sendak Foundation, which would set up a facility to honor Sendak in his hometown. Ultimately, the probate court awarded 88 items to the Rosenbach and 252 to the Sendak estate.

 See Randy Kennedy, Maurice Sendak’s Estate Is Awarded Most of a Book Collection, N.Y. Times, November 1, 2016.

Special thanks to Lewis Saret (Attorney, Washington, D.C.) for bringing this article to my attention.  

November 6, 2016 in Books, Current Events, Estate Administration, Estate Planning - Generally, Wills | Permalink | Comments (0)

Wednesday, November 2, 2016

Divorced Spouses Rights to a Delaware Dynasty Trust

Divorce delawareIn 2014, a high-profile Kentucky divorce case took center stage with the court allowing the divorced spouse to break up a Delaware dynasty trust to access some of its assets as part of her divorce settlement. More specifically, the dynasty trust was to be broken up in order to fund a separate trust for the benefit of the divorced wife. At one point, the trust was estimated to be worth around $300 million. The court looked into the argument of this being a spendthrift trust but ruled that the wife was not a creditor in her claim for maintenance. It would appear that Delaware spendthrift trusts have little protection against a divorcing spouse. However, there are many jurisdictions that see a lack of this protection as well. Accordingly, if you are drafting a trust in Delaware, you should look to a discretionary trust instead because it does not rely on the spendthrift clause for asset protection. 

See Steven J. Oshins, Beware of Rights of Beneficiary’s Divorcing Spouse in Delaware, Wealth Management, November 1, 2016.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

November 2, 2016 in Estate Administration, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Saturday, October 29, 2016

Changing the Property Ownership of Assets Inside a Revocable Trust

Trust coownerA living trust serves to to transfer ownership of property at the time of the owner’s death. When leaving a piece of property in this type of trust for a beneficiary, the item will not need to go through probate, passing straight to the beneficiary. As far as income and estate taxes on the property within the trust, if the property is to be sold at the time of death or up to one year after, there is no federal income taxes. Additionally, if the estate is under $5 million, there will be no estate taxes to pay. As the trustee (oftentimes the creator of the trust) gets older, they can have a successor trustee in place to serve the trust if the creator becomes incapatictated. 

See Lacey Kessler, Think Twiece About Changing a Revocable Trust to List Your Child as Co-Owner of a Home, Trust Advisor, October 28, 2016. 

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.


October 29, 2016 in Disability Planning - Health Care, Estate Administration, Estate Planning - Generally, Estate Tax, Income Tax, Non-Probate Assets, Trusts | Permalink | Comments (0)

Saturday, October 22, 2016

Unrestricted Bequests

Will restrictionsRecently, the University of New Hampshire inherited nearly $4 million from a quiet librarian, and the university decided to spend $1 million of the inheritance on a new football scoreboard. Most saw this use of the money as unfit because the librarian’s passion was literature. The university defended its choice by saying that the funds were given to it without restriction. Indeed, most wills make bequests with no restrictions; in fact, most courts do not favor conditions because some of the time they are unenforceable. The danger of not having restrictions is that there is no guarantee the funds will be used in the way the testator intended. On the other hand, a trust will ensure that inheritances are distributed in a way the creator intended. 

See Ettinger Law Firm, The Danger of Unrestricted Bequests and Gifts, New York Estate Planning Attorney Blog, October 11, 2016. 

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.


October 22, 2016 in Current Events, Estate Administration, Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0)