We just posted a link to a Wall Street Journal article about the pitfalls of being an executor. There are more than a few and even experienced financial professionals can run afoul of the sometimes arcane rules. By the way, these pretty much apply to trustees as well.
Our blog posts over the last few years have delved into many of intricacies of being an executor/trustee – to the point where if you’re the executor of an estate or trustee of a trust, or expect to be one in the near future, you may have second thoughts. We’ve covered it all – undue influence, self-dealing, gifts that aren’t gifts. We’ve written about it all from the point of view of the heirs. But there is, of course, a flip side to all this – the dutiful executor/trustee accused of impropriety.
A year or so ago we wrote about when is a gift not a gift. It was the story of Huguette Clark, a heiress of the last of the Robber Barons of the 1880’s. She went into a hospital in the 1990’s and stayed for decades for, apparently, the company. Over that time she gave donations – loads of cash, amazing art – to the hospital, a museum, advisers and friends. After her death a few years ago family members – very extended members, she had no close relatives – challenged pretty much everything. They allege undue influence and self-dealing by the executors/trustees.
The challenges all go to her state of mind when she made the gifts. Was she coerced into making them? Did her lawyer influence her decisions? If he did, to what end, to have more to manage and therefore higher fees or to get some influence with major charities? The heirs are, in effect, asking Clark’s advisers to account for 20 plus years of financial decisions. Decisions that revolve around what an elderly women wanted or didn’t want. At the time.
In an even earlier post we wrote about a woman who bequeathed the property her family originally settled in the early 1900s to her postwoman. Her family raised the issues of undue influence. They lost in one court, won in another, were finally vindicated by the Supreme Court of Washington.
The thing these cases – and other cases we’ve written about – have in common is that they were and are close calls.
Some details most certainly seem almost textbook examples of undue influence. Others, well, not so much.
Something that comes through loud and clear, though, is the emotions. Underlining everything we write about – even when it’s a cautionary tale right out of Ironman or Batman – are emotions. Somewhere along the line a trustee and/or an executor is going to run into a nest of raw emotion. And, anytime emotions are so heavily involved, especially when they are wrapped around family issues that may go back decades, extra care must be taken. Records, communication, more records are part of that care.
If you have any questions about your responsibilities as a trustee or executor please feel free to call a member of our team and schedule a consultation with our office.