This summer I have come across an inordinate number of articles about the often toxic mix of love and money.
My associate, Paul Nazareth, referred me to an article in the New York Times, Love and Inheritance: A Family Feud, which recounts the saga of legendary actress Celeste Holm, age 94, her 48 year old husband, and her two adult sons (ages 74 and 64), and the power struggle for control of her wealth.
The Latner Family offers a made-in-Canada example. Leah McLaren recounts the tale of the siblings’ feud over their late father’s estate in Latner vs Latner vs Latner vs Latner (Toronto Life, July 2011).
As I’m sure my fellow bloggers who practice estate litigation would agree, fights over estates and inheritances are not uncommon. The rapid growth in Toronto of estate litigation departments, not to mention law firms soley devoted to the cause, offer further proof. What makes the Latner situation somewhat unique, are the steps taken by patriarch Albert in an effort to avoid just such a feud.
Albert’s wife, Temmy, died of cancer in the early 1990’s at the age of 63. According to Ms. McLaren, Temmy’s death prompted Albert to ‘fret about his legacy’. Given his great wealth, Latner’s estate plan was complex, involving, among other things, corporate structures and estate freezes.
What distinguished this plan from not only the typical estate plan, but also from other ultra-high net worth estate plans, was the fact that Albert chose to distribute the bulk of his estate during his lifetime, with each of the four children receiving $150 million.
If Albert thought this would prevent litigation over his estate, he was sorely mistaken. The article details the many lawsuits currently at play.
Ms. McLaren refers to a study from Boston College on the effects of being born rich. Perhaps surprisingly (at least to those who don’t work in this field), ‘the overwhelming concern of the parents in the study was how to pass on the family fortune without stoking bitter family feuds’.
Ms. McLaren’s article discusses a couple of other estate planning techniques sometimes used by the rich, such as making an inheritance contingent on attaining certain goals. Sometimes known as an ‘incentive trust’ (an approach discussed in a recent blog by Paul Fensom), this technique comes with its own set of challenges.
There is clearly no one ‘right’ way to pass on significant wealth (we can now add early divestiture to the list of ill-fated plans). Perhaps that’s because it really isn’t all about the money. According to Sal LaSpada of the International Institute for Philanthropy, ‘what’s fought over in the courts is not so much money but love’. If so, that calls for a much different kind of plan.
Thanks for reading.