14 Jul IS JIMMY BUFFETT’S ESTATE “WASTING AWAY IN MARGARITAVILLE” DUE TO CO-TRUSTEES SUING EACH OTHER
Jimmy Buffett’s widow and co-trustee of his trust, Jane Slagsvol, and his longtime financial advisor, accountant, and co-trustee of his trust, Richard Mozenter, have filed suits to remove each other as a trustee. The trust estate is worth an estimated $275 million dollars (which includes interests in hotels, restaurants, cruise ships, casinos, in addition to property rights on his songs).
Buffett’s trust required 2 trustees – his wife (Jane) and an independent trustee (presently Richard). The trust provided that Jame get all income generated by the trust assets for her life. Additionally, Jane is entitled to other funds from the trust if needed for her health, living expenses, and “any other purpose” as determined by the independent trustee (Richard). The remainder would be inherited by Jimmy and Jane’s 3 children or charities after Jane’s death.
Jane’s suit for the removal of Richard since she questioned why he paid himself $1.75 million even though the trust investments did not perform well. She also has alleged that Richard (1) did not let her know certain financial information; (2) hired an attorney who pressured her to resign as trustee; and (3) failed to cooperate with her as a co-trustee.
Reports indicate that Richard is seeking Jane’s removal since Jimmy was concerned about Jane’s ability to manage and control his large estate after his death.
What could have been done to reduce risks?
A couple of options could have been considered to reduce the risk of the dueling lawsuits that have occurred in this case:
#1. Clarification on how Trustees can be removed
Courts prefer to not remove trustees unless there is a sufficient reason (i.e., fraud, conflicts, etc). The trust can name who has the authority to remove a trustee (i.e., residuary beneficiaries, trust protector, or trust advisor) and whether it is with or without cause. The trust can also say who has the authority to appoint a new trustee and who can then be appointed as a new trustee (i.e., family member, professional fiduciary such as a bank, attorney, or certified public accountant, etc.).
#2. Choose a Trustee you can trust and who can manage the estate
Most prefer to choose a family member as a trustee due to the cost of professional fees. However, often it is better to have a professional manage and invest the trust assets in addition to handling distributions from the trust. A professional trustee is often better when there is a likelihood of family animosity. For example, if one child is in charge of a trust for the benefit of their sibling, then this often leads to “why are you not giving me my money?”
#3. If you have Co-Trustees, choose Trustees who are likely to get along
Buffett likely thought it was best to have an independent trustee whom he could trust, but he also wanted to give Jane some say on the trust assets to be used for her benefit. However, this case demonstrates the problem with having co-trustees (in addition to failing to clarify how and under what circumstances a trustee could be removed).
Being a trustee may not be a “Cheeseburger in Paradise”. Estate planning is more than who gets what assets when one passes.
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