This Blog was written by: Kristie Smith, Estate and Trust Consultant, Scotia Wealth Management 

Last week marked the 104^th anniversary of death of Saginaw, Michigan lumber baron – and, evidently, eccentric millionaire – Wellington Burt, but only the 12^th anniversary of the settlement and distribution of his estate.

His is a story of second families, family feuds, philanthropy, spite, legal challenges. His story is chronicled in some detail in various records: see, for example, Justin Engel’s four-part series in Mr. Burt’s local newspaper, the Saginaw News (here, here, here and here).

Ultimately, Mr. Burt’s story is one of a largely successful, if unusual, estate plan, and provides a few take-aways for anyone considering a long-term or contentious plan.

Mr. Burt was twice married and father to seven children. He was pre-deceased by both of his wives, and lived the last years of his life isolated from his family – earning him the moniker “The Lone Pine of Michigan”.

Mr. Burt’s lengthy resume extended beyond his time and fortune in the lumber industry, from humble beginnings in farming at age 12, to sailing, to the iron mining industry, railroads, baking and finance. Through his various endeavours, Mr. Burt amassed a significant fortune, putting him in the list of the eight wealthiest men in the United States for a time in the early 20^th century.

Public service clearly played on Mr. Burt’s mind, with generous gifts to various causes during his lifetime, not to mention his tenure in politics as one-time mayor of Saginaw and later state senator for Michigan. However, any philanthropic legacy planning was undone when a municipal assessment increased his property’s assessed value by 250%. Mr. Burt’s reportedly retorted: “you’d merely be killing the goose that laid the golden egg”, but city officials stayed firm. Mr. Burt struck generous bequests to Saginaw from his plan.

Upon his passing at age 87, officially caused by “senility”, an unusual estate administration began, the terms of which were set out in a handwritten will signed two years before Mr. Burt’s death:

• To his family, he left modest gifts: one daughter excluded entirely; five children left annual stipends of $1,000-$5,000; one favoured son given $30,000 per year.
• To his household help, nearly equivalent sums: his secretary received $4,000 per year, while his cook, housekeeper, coachman and chauffeur were given $1,000 annually.
• For reasons untold but much speculated, Mr. Burt delayed the distribution of the bulk of his estate – his so-called “golden egg” – by settling it into a testamentary trust, to be held until 21 years after the death of Mr. Burt’s last surviving grandchild alive at the time of his death.

The will was challenged over forty times, including on the issue of testamentary capacity, with at least two successes: in 1920, one year after Mr. Burt’s death, a $5 million portion of the estate consisting of leases in Minnesota was distributed to several children and grandchildren, as Minnesota law did not permit such a long trust. Forty-one years on, nearly three-quarters of a million dollars was paid out to 12 other heirs (including 3 estates) in settlement of a second lawsuit.

However, the lion’s share of the estate remained in trust, as designed by Mr. Burt and his advisors, for over 91 years. In 2010, 21 years after the death of Mr. Burt’s last surviving grandchild alive at his death, the conditions were met for the distribution of Mr. Burt’s remaining fortune.

Thirty applicants sought to share in the $100-$110 million USD estate; a judge assigned to review the applications and oversee the distribution ultimately found 12 rightful heirs, who received their shares in 2011. Even after those 12 heirs and their 20 legal professionals agreed upon a proposed distribution of the trust capital (the shares were to be determined based upon generation and number of siblings), a further objection was made by the institutional trustee, as to their fees and disbursements.

The take-aways?

1. Ensure testamentary capacity is considered and documented, if a challenge is anticipated or likely. For example, if you are disinheriting a child or leaving more to your household staff.
2. Consider multiple will planning if, for example, you own iron leases in Minnesota (or other property abroad).
3. Explore options for philanthropic planning: perhaps a bequest to the city who ‘wronged’ you via their property tax assessment doesn’t fit the bill, but a discretionary power to the trustee to choose an appropriate recipient or the establishment of a donor-advised fund to benefit certain charitable purposes or fund a community scholarship would be palatable.
4. Seek appropriate legal, tax and other planning advice, about your plan and to ensure that impatient beneficiaries or administrators can’t undermine the plan, for example, by collapsing a trust early on consent of all beneficiaries.
5. Be clear on who qualifies as beneficiary, by naming them or clearly defining the class.
6. Select a suitable estate trustee: one that will outlive the envisioned distribution scheme and timeline, with the expertise to administer the estate or trust in keeping with the governing document. Make sure that the terms of engagement for the selected trustee are agreed to upfront and appropriately documented.