Two Year’s of Probate Posts

It’s been two years since we started a different tack with our blog posts and began to write about probate cases and issues in the news (past and present) and popular culture. We were going to do a little ‘best of’ review this week when we run across a feature article in last week’s New York Times that, in effect, does an exceptional job of summing up our issues and themes over the last two years all by itself.

So, this: an ophthalmologist in a small college town in Arkansas in the early 1980s opened a series of eye surgery centers, a new idea at the time, they made him wealthy. He was, obviously, an entrepreneur as well, and a good one. Who really seems to have known exactly what he was doing. He planned, he protected his assets and businesses, he worked with lawyers, banks, and insurance agents to take care of his family ‘just in case.’

In short, he did everything right. Which was fortunate for everyone involved for he was tragically killed in a car crash in 1989 at age 56.

He left behind his wife and three children. They lived very comfortably after the doctor’s death, the two sons both became doctors and stayed in town. The daughter studied art and did graduate work at Sothebys, then moved to Atlanta. The sons and their families and their mother lived next to each other.

Ideal. The poster child for doing it right  . . . and it all ended in 2002.

That was when the daughter, expecting her first child, moved back to Arkansas with her second husband. The husband was a businessman who invested in small companies, he had a MBA and was a chartered financial analyst.

His wife was receiving income from her father’s estate, the husband began to have questions about the makeup and management of the trusts.

Before we go further, it’s important to note that the estate was comprised of partnerships, real estate holdings, farmland, and many

other entities in which the father had partnered with his friends. It was, then, filled with assets that were, at any given time, extraordinarily difficultly to value.

It’s also important to note that the insurance agents, bankers, trustees, and business partners were all locals, a small-town network of professional friends, some of whom the father and mother had known their entire lives..

The husband’s questions, initially revolving around an expensive homeowner’s policy on the mother’s house, had an immediate effect: the other family members stopped talking to the daughter and her husband. They have not talked in 16 years.

In 2004, the mother was diagnosed with Alzheimer’s, she died in 2007, one of the sons became a trustee after her death.

By then, the daughter and her husband were looking into much more than the home insurance. They hired a forensic accountant and fraud expert to look at years of financial statements claiming that up to $100 million were unaccounted for. He found several issues.

After the mother’s death, the family split in two – the two sons, who said in sworn testimony they were fine with the trusts and the accounting; the daughter and her husband who demanded a full accounting.

At this point you may very well be thinking what a prominent wealth adviser (not involved in the case) said, “It’s never good when an in-law becomes a detective, you can write the ending. It’s not positive.” Though she goes on to note that the questions raised by the son-in-law may be perfectly valid and could have already been addressed over the years. The thing is, the daughter and son-in-law wouldn’t know because there is no communication between the two fractions.

No communication has led to the amplification of past perceived slights between the siblings and created all new issues. Returned Christmas gifts, personal snubs, and more, have become part of the case. All of it has resulted in the complete erosion of trust.

Before anyone appoints the son-in-law or anyone the villain in this piece (really, who knows at this point) there’s this, from the president of a national trust company:

When I hear these stories and think how did people get into these situations of not talking to each other, you go back to who did you appoint as the trustee. Individuals often appoint their friends and family members, it makes sense, but sometimes out of a sense of love or obligations, they don’t fully appreciate the obligations of the role of trustee and what can happen if those are breached. Family members are often unaware of the myriad duties they’re responsible for. Often even well-educated professionals have little knowledge of finance and the details surrounding estates can quickly get arcane.

There you have it, an almost perfect summary of many of our blog posts over the past two years.