Damn the Torpedoes (40 Years Later) and Full Moon Fever (30 Years Later)

When Tom Petty tragically died of a drug overdose in 2017, he left a wife, Dana York Petty, and two daughters from his first marriage, Adria and Annakim. He also left a catalogue of music that his fans crave for, including the anticipated album “Wildflowers – All The Rest”, which was to feature unreleased tracks from the original “Wildflowers” recording session. The release was intended to coincide with the 25th year anniversary of the release of the Wildflowers album on November 1, 1994.

Tom Petty appears to have engaged in some substantial estate planning over the years. His trust named his second wife Dana as his sole successor trustee. Since his death, she served as trustee. His trust directed that Dana was empowered and directed to “create a California limited liability company (or such other entity as the Trustee deems appropriate) … to hold [Tom’s] Artistic Property”.

Tom gave Dana broad discretion in creating the entity, the execution of an operating agreement and establishing a governance structure. Tom provided only one caveat: that Dana, Adria and Annakim “shall be entitled to participate equally in management”.

The estate plan seems solid and simple enough. His fans eagerly await each release of subsequent Tom Petty compilations. Since his death in October of 2017, two complications have been released. Now the release intended for this coming November is in jeopardy and at risk and it seems that an unraveling of the planning of Tom’s estate is the heart of the problems.

The court filings and other reports indicate that Adria has apparently changed her mind on key decisions, including her stated intention to delete “and the Heartbreakers” off the artist name on one of the prior complications. She emailed two founding members of the Heartbreakers on that subject and stated: “what I don’t have the temperament for is having my entire life raped. Being disparaged. My dad being disgraced. And being surrounded by selfish, unreliable people and drug addicts.” Adria has stated an intention to delay and postpone release of “Wildflowers” and has gone further, stating to record executives that she will be taking over control of the estate in short order.

It all seemed so clear when Tom provided his lawyers with his instructions and they presumably wrote them into the documents correctly and clearly. Certainly there was no room for interpretation or ambiguity. Three people shall be entitled to participate equally in management.

According to Adria and Annakim, participation equally means just that. Each person has one vote in the management decision making. Adria has texted that all decisions shall be “majority rule” and that it will be smoothly run as a result. They argue that this was Tom’s intention and his words were clear.

On the other hand, Dana argues that Tom did not intend to give his daughters the right to rule by majority and he did not intend to disenfranchise Dana entirely. She argues in her petition filed with the court that “equal participation in management can only be ensured by requiring consensus for significant decisions; otherwise the opportunity of the majority – Tom’s daughters from his marriage to Jane- to abuse and exclude [Dana’s] minority position, which will inevitably lead to endless litigation, would be a virtual certainty”.

What happened here? Did the drafting attorney fail to consider the family dynamic of children from a prior marriage managing a business with the second spouse?

From a litigation standpoint, the LLC concept should be clearly defined in order to reduce the chances of what seems to be a highly likely dispute in a case like this. Second spouses and children from a first marriage are harbingers of estate litigation. Knowing this, the drafter could have specifically designated the second spouse and the two children from the prior marriage as the co-managers of the LLC and that each manager has one vote – if that was the intention. Otherwise, if the creator of the trust intended operations to be in perfect harmony, he could have said so. He could have specified that management decisions must be unanimous. While that seems a set up for paralysis, it could have been his intent that his highly valuable and substantial artistry collection be managed and operated in a holistic and collaborative fashion.

This type of estate plan could have also added a tie breaker and deadlock breaker provision. If desired, the creator of this type of plan could have included a dispute resolution provision with requirement first for a friendly mediation facilitated by a third party neutral and then for arbitration.


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