Posted By Larry Tolchinsky on November 1, 2012
Whitney Houston prepared an estate plan long ago, back when her daughter Bobbi Kristina was born: she executed a Will that contained something called a Testamentary Trust. She did this because she had numerous assets that she wanted to protect and she wanted to insure the financial future of her daughter. Because of her planning, her Estate, and the Trust, will grow in value as her sales continue on through the years. It’s estimated that the value of her estate is around $20 million.
This week, Bobbi Kristina’s grandmother (Cissy Houston) and her aunt (Marion Houston) filed a Petition to Reform the Testamentary Trust. The lawsuit asks for a Court Order to change the terms of the Trust, the Trust that was created and approved by Whitney Houston, because it “…would likely directly conflict with and cause the opposite of [Whitney's] intent which was to provide for the long-term financial security and protection for her child.”
Right now, the February 1993 Will gives Bobbi Kristina 10% of the Estate when she turns 21 years old; another 1/6 of the Estate at age 25; and everything else at age 30 years. Bobbi Kristina is 19 years old now.
Bobbi Kristina will have lawyers, of course, arguing against this change. Key fight? The allegation by her grandmother and her aunt that she is a “target for those who would exert undue influence over her inheritance and/or seek to benefit from her resources or celebrity.”
Larry Tolchinsky’s Tip:
Trust litigation in Florida is controlled, in part, by Florida statutory law. The Houston case serves as a good example of what can happen when the law is used to create a conflict with a Trust Settlor’s intentions. Family fights over money are common, and even though a decedent takes steps to insure that things go smoothly and his or her assets are transferred as he or she wishes, it does not mean that lawsuits won’t be filed to change those wishes or plans.
Sometimes this is a good thing. If a young person is vulnerable to being manipulated or conned by someone who is out for themselves and not the young person’s best interests, then this indeed is an example of “undue influence” against the beneficiary, not the creator of the will or trust. (For an example of that argument, read our post last week regarding the Florida challenges of undue influence on millionaire Jeno Paulucci as he changed trustees shortly before his death last year.)
Beneficiaries can be exploited just like those who are writing wills or trusts can be. The same psychological factors are involved: someone sad or isolated; someone who is anxious; someone who is naive or trusting; etc. are all red flags to people who are ready to take advantage for their own personal gain. There is an interesting ABA Article that delves into these issues entitled “Psychological Aspects Of Undue Influence,” by Ira Daniel Turkat if you’re interested.
Florida laws are in place to protect potential victims from harm – even from themselves as they are being unduly influenced by a ne’er do well. Trust lawsuits can be filed to gain the intervention of the courts to help here, and this is true even if part of the story comes from another state or country. If there is property here, etc. then Florida law may control. It may seem strange for loved ones to square off against each other in court, but it happens all too often when injustice is at stake.
Do you have questions or comments? Then please feel free to Chat with Larry in the comments below, at email@example.com, or (954) 458-8655. If you have a specific situation, please call or email Larry because he can’t answer specific fact questions in general comments. He’s happy to take your call.