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.

Trust Funds for Pets: It’s Not All Doggie Bones and Biscuits

Estate and trust litigation can occur for a variety of reasons. A trust fund dog named ‘Winnie the Pooh’ experienced this first hand. There, the trust manager and the pet’s new caretaking fought over the frequency and amount of money distributed from the trust.

The dog’s owner had set up a trust for $100,000 for the dog with the remainder for an animal hospital. The dog’s caretaker reportedly ended up having to sue the estate’s executor after he allegedly failed to make trust payments for the dog’s care. The caretaker further alleged that the executor had refused to provide records relating to the trust and the pet’s medical history, and that the executor was favoring the remainder beneficiary. The executor denied the allegations and blamed the caretaker for the confusion.

The merits of a case like this will depend largely on the fiduciary’s legal obligations under the law and the specific terms of the trust. Of importance would be the degree of discretion afforded to the trustee in the trust instrument for making payments. The parties should retain records to support their position, including copies of letters, payments, receipts, demands, refusals, and bank records. Relying on ‘he said, she said’ evidence will end up costing both sides a lot in legal fees, and it may even significantly reduce the trust if the judge awards attorney’s fees out of it.

Family members or remainder beneficiaries may also attempt to challenge a pet trust that leaves a large sum of money to a pet. Leona Helmsley left twelve million dollars in trust to her “beloved Maltese, Trouble.” The court held that twelve million dollars was excessive and reduced the amount to only two million dollars.

Another owner reportedly left $4,761,346 in trust for two cats (see Matter of Abels, 44 Misc 3d 485 [Sur Ct, Westchester County 2014]). The executor of the will argued that based on the cats’ life expectancy and estimated costs, the amount of the trust should be reduced to $440,000. The executor also argued that by selling the mansion and relocating the cats to a smaller residence, the tax liability could be reduced and the charities could receive more.

The judge denied the executor’s request to reduce the trust. The judge held that the decedent’s intent was clear and should be followed. The judge reasoned that the pet owner wanted the cats to live in the house they were comfortable in and made specific arrangements for this.  The judge concluded that it was not the court’s place to “rewrite the decedent’s will” and to give more to the charities than the decedent intended. 

Luckily, justice prevailed for these cats. They were able to stay in their mansion and enjoy their lives in luxury.

Learning from Sumner Redstone: A Warning to Estate Planners and Other Professionals

So, the legal drama involving Sumner Redstone and his live-in companion, Ms. Herzer, has settled. But is this the end?

Not exactly. It is reported that Mr. Redstone’s estate planning counsel remains a defendant in another action brought against her by Ms. Herzer.

In the pursuit of money, the new frontier is pursuit of the professionals involved in an individual’s planning. The trend is to bring claims against lawyers and accountants and other professionals – why – because they ordinarily have insurance! There is a growing and obvious alarming trend to bring these cases against professionals, with thin, little or no merit with the intent to scare up a quick settlement. Many attorneys who take these cases take them on a contingency fee arrangement. Often the cases turn out poorly for the claimant plaintiff.

We advise professionals to reject these extortion style attacks. In our experience, the cases often are poorly thought through and designed and often seek to apply a cheap front-end bully attempt that often ends in a fold up and blow away outcome.

The other consequence of this type of litigation is further satellite litigation spawned by these cases. When attorneys are sued, they often consider impleading accountants and other professionals into the case. The thinking is to bring them into the case because they have insurance.

Apparently in the Redstone case $75 million was not quite enough for one litigant.

Sumner Redstone – The End?

With under a week left before trial, the case with his live-in companion has become settled. In the end, Manuela Herzer will pay back $3.25 million of the reportedly $75 million he bestowed on her. Sydney Holland, another female companion who reportedly received $75 million, had her own lawsuit and that case settled last year.

This has gone on since 2015. Ms. Herzer’s case alleged federal Rico claims against Redstone’s daughter where she argued that there was a conspiracy between daughter and father to remove her from the mansion and cut her out of his will. Most of that case was dismissed last year.

This is a big settlement, with big numbers and significant potential future ramifications. Control of a media empire is at issue. Ms. Herzer will no longer remain in his will. All the appeals will be discontinued. Which leads to a few questions.

How much does a matter like this cost?

Her haul is reported to be a lot of gifts, including $45 million in stock options, a home worth about a cool $2 million, almost $10 million in home repairs, and items purchased while shopping. She was in for about $70 million or so after 3 1/2 years of litigation. If her lawyers took the case on a contingency, she may have netted 2/3rds, after expenses. That would be about $47 million to her, and $23 million to her counsel.

That seems like a high fee for three and a half years of work. If a lawyer worked full time on the case for a year at $800 per hour, the annual billing before paying overhead could be $1.6 million. For 3 1/2 years that would be $5.6 million in gross fees, assuming full time work on the case all day, every day. The contingency arrangement looks pretty good for the lawyer here. Clearly there was risk in the case and the certainty of a stiff fight among a lot of family members and others.

The reported terms of the settlement are that each side pays their own respective legal fees. A source for the media (unnamed but reportedly close to the case) has stated that the legal fees are ten to twelve million dollars – for each side in the case. Is that reasonable?

In New York that is the standard – is the fee reasonable? In much estate and trust litigation in New York, the fees are subject to the review of the court if they are paid from the estate or trust. The court’s authority is ordinarily modernly derived from Matter of Stortecky v. Mazzone, 85 NY2d 518 (1995). That case stands for the proposition that the judge most always has the power and authority to review the fees.

Another leading case in New York is Matter of Potts, 213 AD 59 (4th Dept. 1925). These two long standing and often cited cases essentially distill down to several factors: the time spent, the difficulties involved in the matters in which the services were rendered, the nature of the services, the amount involved, the professional standing of the counsel, and the results obtained.
In this case, the factors could probably be satisfied.

These types of cases are often costly based on the factual detail and nuances involved in the proof of the transactions that are the subject of the case. The cases are also often costly because they require the testimony of expert witnesses. For example, doctors charge by the hour to review the medical records, offer opinions, provide their time consulting on the case and ultimately, giving up a day practicing medicine to testify in a court room. They charge for the lost opportunity. A day in court with a credible doctor in New York can cost $10,000, for the day. Most require payment of all expenses and the payments are often required to be made up front with a non-refundable policy.

Economists, and accountants are often called as witnesses as well.

Sumner Redstone’s “Guardian”?

The WSJ headline this week read: Court to Appoint Guardian for Sumner Redstone. The headline on its face is clear in its implication that the controlling shareholder of CBS Corp., and Viacom Inc., will no longer be in control of his own affairs. The upshot is that he has lost it and lost control of his affairs. Could this be true? He is seeing little green men?

When a guardian is appointed, is all lost for the person?

There is much more to the story than the WSJ headline. There are more details relating to the recent outcome of the matter than suggested by the sensational headline.

The development of the appointment is part of a much larger legal dispute, a legal war, that has its genesis in Mr. Redstone’s past relationship with an old girlfriend who is in her early 50s. He is 95 years old. Her efforts have been a well-documented legal drama stemming from her having been removed from Mr. Redstone’s mansion in Beverly Hills. She contends, by direction of his daughter, who seized on his waning capacity to usurp control. The girlfriend was at one time his health care proxy and by accounts, she was included and provided for in his estate. After their relationship soured, she has persistently fought against his decisions by claiming that he lacked the mental capacity to make the decisions terminating her roles.

There is a significant amount at stake, and Mr. Redstone filed a subsequent lawsuit against her to recover $75 million in gifts that he gave her. His wealth is estimated to be $5 Billion. That trial will be next year, and she is pressing it. Adding to the proceedings are claims by Mr. Redstone’s daughter Shari Redstone and his grandson who will control his trust – when he is determined to be incompetent or on his death. Mr. Redstone was known to have spent the bulk of his adult life legally and generally feuding with his daughter and stated openly that he did not want her to be involved in corporate leadership. In an e-mail to her son she once said, “Your grandfather says I will be chair over his dead body”. The trust controls CBS and Viacom. His family contends that he has capacity.

This is all about money and control. They are common pursuits. But the legal wrangling is interesting and less common as the strategies are assessed and the case evolves.

Certainly, the attorneys for Mr. Redstone adopted the same defensive position present in virtually all these types of cases, where the guardianship is resisted: “he is fine”. That position can be very effective and persuasive where the individual is strong. But here, like in many cases Mr. Redstone was known to be failing and he was of advanced age. His public appearances were growing limited and his visible confidence seemed to diminish. Candor with the court in these circumstances becomes paramount and often a shifting strategy must be considered. Running a bluff, with a hope of settlement is typically a losing strategy. Practical concerns abound in that third parties who interact with the person may offer non-corroborating opinions. In fact, their recounts of interactions may contradict the position that he is fine. In some instances, depositions can blow the case wide open. Worse yet, if medical information is not managed correctly it can be very effectively used despite efforts to keep that proof out of the case. The court knows what inevitably happens to people when they age. It can be a mistake to stake out an impossible position on the proof when your client is declining. Competent counsel effectively identifies and assesses risks. Settlement may be impossible. The trial risk relative to an adverse finding, disclosures of highly sensitive personal and business information. Like in Redstone, an adviser finding can trigger collateral consequence relative to trust and estate planning. Often the finding of lack of capacity can be permanent. In the Redstone case there is plenty at risk at present and into the future.

Mr. Redstone’s lawyers, for many years adhered to the “he is fine” mantra. It staved off the appointment of a guardian and seemed quite effective. The adverse consequences of going forward were averted. However, the recent ruling while on its face may appear to be a big loss, may turn out to be a sizeable win for Mr. Redstone.

Of recent, Mr. Redstone’s attorneys appear to have softened on the “he was fine” position. Instead they shifted to a position of “deteriorating health conditions”. Was that a complete capitulation? Why? But is that enough for appointment of a guardian? It appears that Mr. Redstone’s girlfriend’s attorney thought so – as they have asserted this vindicates her position and further, shows that Mr. Redstone had no capacity when he sued her.

But not so fast. A closer look reveals that the shifting position may well have worked well. Although the headline suggests a whopper of a loss the result is not a complete wipe out for Mr. Redstone.

Do You Trust Your Brother?

The names are different, but the facts are often the same. Unfortunately, more often than not, the outcome is also the same. The outcome does not have to be the same in every case. The maxim: an ounce of prevention is worth a pound of the cure is sadly most fitting.

Illness / Rely on family

Floyd W. Fisher was diagnosed with stage IV lung cancer in July 2015. Shortly after his diagnosis Floyd named his brother Larry Duane Fisher as his agent under a durable power of attorney. This document, which is very common, gave Larry complete control over his brother’s affairs. Presumably this was a sound decision. Larry had been a deputy for the Kit Carson Sheriff’s office. Larry told Floyd’s daughter not to worry and promised her that when her father died, he would handle the estate and file a probate case with the court. Certainly, the family was relieved that Floyd’s affairs would be handled in a competent trustworthy manner by a family member with a law enforcement background.

Death / Suspicion

Later that year in December, Floyd died. With no probate having been filed by Larry, Floyd’s daughter petitioned the court to handle his estate. After her appointment she found out the truth.

The truth

Larry stole from his deceased brother’s estate. He drained a bank account with more than $200,000, established for his brother’s care and treatment, down to $13.59.

He sold a piece of real property that had been in his brother’s wife’s family for generations to obtain funds for Floyd’s care. Almost $200,000 from that sale was earmarked for “the sole purpose of Floyd’s care and benefit and to pay his medical bills”. Larry changed the address on the account to his home and began to transfer the funds to several different accounts, including one for his teenage son.

Larry bought a Toyota truck for about $45,000 and purchased multiple guns with his brother’s money.

The outcome

In the end, the total amount spent from the account on Floyd’s care was $13,192.15, which included the cost of his funeral, $4,870.

In May 2017, Floyd’s daughter filed a criminal complaint against her uncle Larry. On December 6, 2018, Larry was found guilty by a jury in Denver Colorado of felony theft.

While the outcome may be just, it is unfair to the victims and leaves the family of the decedent with no real remedy if they cannot cover the assets.

What can be done to prevent this?


The outlook and suggestions presented on prevention is based upon experience in litigation of this nature.

Retain a respected and experienced lawyer knowledgeable in the planning practice area. Great resources for referrals to those professionals are other lawyers, CPA’s, bankers and asset or investment advisors.

Do not make the decision to grant a power of attorney to anyone lightly – including family and particularly, “friends”. In many instances, friends and family are unsuitable agents due to conflicts, family animosity, jealousy and insatiable temptation. Professional advice concerning suitability of the intended agent is highly beneficial and can prevent a bad outcome. Using a professional can allow for a background check, credit check or other appropriate inquiry into the proposed agent – before the documents are signed.

Consider appointment of a disinterested person. Family members often are willing to serve for free. Why? Indeed, in many instances the principal does get what he pays for. When family members or friends offer to serve for free the professed altruism must be critically assessed. An agent can be compensated by the principal. Fair, but nevertheless relatively modest compensation has the potential to expand the class of persons suitable to serve as an agent.

Consider utilizing more than one person. New York law allows for more than one agent to be nominated and for the principal to decline to allow them to act separately. At the outset two individuals may be appointed to act together. Consider checks and balances and perhaps a monitor to review and supervise the actions of the agent. Any agent suitable for consideration for appointment must be a person absolutely trusted.

Split the duties among a small number of trusted people or create some redundancy so that more than one person has knowledge of the finances and the transactions as they occur. An easy measure that affords a lot of potential protection is requiring that more than one account statement be issued each month and that they be mailed to different persons. For example, the agent and the principal’s accountant.

Do not appoint a person susceptible to creditors, predators, greed or temptation.

Avoid new “friends” who are merely acquaintances. For example, a new home health aide, handyperson or other similar service provider or helper.

Involve professionals. Consider utilization of a banker, lawyer, CPA or other similar professionals who are regulated, supervised or licensed, and often insured.

Another option to consider is a springing power of attorney instead of a present grant of total control. The benefit of this technique is that the power is not granted to the agent until the happening of an event – often a medical or capacity related decline.


With counsel, Floyd might have been better advised to establish a trust. There was no indication that he lacked the capacity to do so. He certainly had sufficient assets to justify the effort and the work. A trust for his benefit during his life might well have prevented all of the harm. He could have nominated a local bank to act as the trustee during his life. This approach would have almost certainly prevented the outcome here.

The Great Wealth Transfer

About 45 million U.S. households will transfer over $68 trillion in wealth over the next 25 years.

On November 20, 2018, CNBC reported that baby boomers are the wealthiest generation in American history and that they will turn over the most wealth ever to next generations.
The article said: “yet that exchange might not be as large as you had hoped if you don’t take the right estate planning steps”. Today, we look at the CNBC topics from an estate litigation perspective. Pitfalls of some potentially good advice are offered here. This is intended to be a helpful high level consumer guide for people considering acting on suggestions offered by CNBC’s journalist MacKenzie Sigalos in her recent article . We follow her topic headings here.


The first point made in the CNBC piece was that you should ensure there’s still some wealth to pass down. In our practice we are often exposed to client problems exacerbated by procrastination. Delays in coming to grips with one’s mortality and the decisions associated with the inevitable can erode the base of wealth built over years of hard work and careful savings. Risks of dementia or a more catastrophic illness can crush or destroy the ability to plan by a loss of capacity. Time is often an important requirement of a well thought out plan. Great estate plans often need time to evolve and work to preserve, gift or unfold wealth accumulated over a lifetime.

Preservation can be ruined by risks of loss. Do consider whether adequate insurances are available. Insurance comes in many forms to address a host of risks. Health, life, liability and long term care insurances must all be considered. Insurance costs are often thought to be high, but it is often well worth the cost when asset protection or wealth preservation is at risk. For example, long term care costs can quickly consume all assets. An auto accident where you are at fault can create liability in excess of policy limits fast where someone is seriously hurt. If your work exposes you to suits you must consider the adequacy of insurances. A proper life insurance product can often cover debts and taxes as well as make the surviving beneficiaries wealthy.

We often focus on the facts associated with the decision making of the decedent in our practice. Do they appear to have been clear minded and associated with a rational process? Were there strong and disinterested competent professional advisors involved in an effort to protect assets or preserve wealth? What was the outcome of the effort?

Death & taxes

CNBC ‘s story recognized correctly that most estates are below the current estate tax exemption. That point is pertinent to the federal rules. However, the rules can be tricky if you have made gifts or the state estate tax threshold differs from those of the federal rules.

What is the correlation between the overall value of the estate relative to its liquidity? Were strong and smart decisions made pre death as well as post death within the context of the administration of the estate? Post death, does the accounting by the fiduciary state that the assets were properly handled in order to timely pay appropriate estate taxes?

Set up a trust

This direction appears in the CNBC article with this heading. While that approach can be a positive technique for some people, sometimes funding the cost of the work to make the trust, including efforts to retitle assets into the trust, simply are not worth it for many people. A good question to ask is what is the objective to be achieved? Is the trust intended to be for asset protection – is it for protection from predators, creditors and other nefarious interlopers who may try to benefit from the grantor or her beneficiaries?

We look at the purpose for the trust. Was the intended purpose legitimate and sound? Not everyone needs a trust.

Sometimes trusts are written unclearly or contain mistakes. Some trusts are unclear as to who is intended to benefit. In those instances a construction proceeding in court before the Surrogate Judge is required. Ordinarily that focuses on the issue of the decedent’s intent at the time that the trust was signed. In many cases we represent the fiduciary and call the drafting attorney as a witness to testify under oath for the trust or estate to prove the decedent’s intentions at the time the trust was written.

Consider a living trust

This concept is promoted in the article as a suggested manner by which to avoid probate. The article stated that avoiding probate keeps your wishes private. We have seen many instances where this type of work is not done correctly or completely creating a nightmare for the survivors. Trusts must be properly funded in order for them to work. Unfunded or partly funded trusts present a problem. It often culminates in both a probate proceeding as well as a trust administration. In those instances there is no privacy and often double the legal work in the end. Sadly, the legal work that had been done earlier in connection with the living trust is often of little to no value to the client and her survivors.

In one case, we found that the trust had been fully and properly set up, and the attorney’s legal file closed. When the decedent died it was discovered that a deed was never prepared to transfer the home from the decedent’s name to the trust during her life. This defeated the exact purpose of the trust, as it was intended to hold the house and then pass it on after the decedent’s death to the survivors.

We find that the living trust requires a high degree of continuing attentiveness to ensure that all assets are transferred in it. Otherwise, assets that remain outside the trust may be found to pass to unintended persons.

Our Conclusions

With all of this wealth soon to pass there are many opportunities for good intentions to go awry. Surely this will lead to lawsuits and challenges to good solid estate plans where great work of highly competent planners will be successfully defended. It is crucial that lawyers doing the estate planning and their clients remain highly focused on the desired outcome and objectives of their work together. When we defend estate planning work we find that very often the best work is that tailored for the individual client. Estate plans are personal. Where the legal work is carefully done by a planner to state the instructions of the decedent on the documents the outcome is usually very good. The passage of this great wealth in America will not be without challenges. It is important for the consumer to remember that there is no one size fits all in the estate planning practice.

Who Are Your Relatives? Prince’s Music and His “Son”

The Artist Formerly Known as…

The news headline of November 21, 2018, says: “A guy who has claimed to be Prince’s son has filed documents with the estate declaring he plans to sue for a piece of Prince’s fortune.”

In estate litigation it is not uncommon for the parties to learn of new and different potential relatives. The interesting legal question often is whether or not the person is really a relative and if so, what is the significance of the claimed relationship. Many cases involve claims attempting to test the limits of the definition of the legal term known as “issue”, which is generally thought to be a person’s children or other lineal descendants such as grandchildren and great grandchildren. However, the term does not mean all relatives, but only the direct bloodline.

So, in Prince’s case Ogeda Patrick filed a notice with the estate stating that the estate has erroneously and continually omitted him as the true heir to the Prince estate. It seems that Patrick’s claim is that because he asserts that he is Prince’s son, he inherits from Prince’s estate because he fits in the class of Prince’s issue.

We understand Mr. Patrick’s purpose in making his claim that he has an interest in the estate. In August, more posthumously released music was turned out by Sony Legacy Recordings. The estate has indicated that it will release corresponding videos. Prince was an interesting and talented artist. In the legal environment he was known to be vocal and active in his efforts to protect his music and to remove unauthorized uploads of his music on the internet. Perhaps the artist’s protective actions will drive up the value of his estate.

Understanding Mr. Patrick’s motivation, what threshold obstacles would he face in his effort to share in Prince’s estate if it were in New York? First, was paternity established in Prince’s lifetime? Was there a blood genetic marker test administered to Prince? In order to be admissible in evidence the test must have been administered to Prince prior his death. Is there other evidence that supports the test result? Was there a lawsuit commenced to determine the paternity before Prince’s death? In New York the law allows nonmarital children to inherit from their father and paternal kindred if paternity is established by clear and convincing evidence and the father of the child has openly and notoriously acknowledged the child as his own.

In 1984 Prince released his most famous work, the album Purple Rain. He explained the meaning of “Purple Rain” as: “When there is blood in the sky – red and blue = purple…purple rain pertains to the end of the world and being with the one you love and letting your faith/god guide you through the purple rain.” In Mr. Patrick’s case perhaps, we will one day soon know much more of the details surrounding Prince’s lyrics about a Saturday night – I guess that makes it all right – Little Red Corvette.