The big lessons from celebrity estate wars
NEW YORK |
NEW YORK (Reuters) – Philanthropist Brooke Astor. The Grateful Dead’s Jerry Garcia. There are a few celebrities who, in death, at least in certain circles, have become as known for the litigation over their estates as for how they lived their lives. While the dollars are mind-boggling in these cases, anyone thinking about wealth transfer faces the same issues: dysfunctional families, potentially unequal positions in the family business, perhaps multiple marriages with kids from each.
We spoke with Russell Fishkind, an estate attorney and a partner in the East Coast law firm of Saul Ewing and author of “Probate Wars of the Rich and Famous: An Insider’s Guide to Estate Planning and Probate Litigation,” about what regular folks can learn from these high-profile estate battles.
Q: What’s the most common scenario you see?
A: Hands down, most common was a second marriage, or third marriage, with children from multiple marriages. If the estate plan does not adequately provide for Spouse No. 2 and for the children from the first marriage in a way that tries to achieve equality, you’re basically buying a litigation case. The two most notable celebrities were Anna Nicole Smith, who at 26 married an 89-year-old billionaire, and Jerry Garcia, who had numerous children with different women, and then, just before he died, married Wife No. 3. The first turned into the longest estate litigation case we’ve seen in 100 years. The second led to litigation over custom guitars, Cherry Garcia ice cream and Jerry Garcia ties.
Q: What’s happens if the family is in business together?
A: A huge amount of our wealth is from family business owners, and often mom or dad runs the business, and one or two children are in it, and one or two children are not. If I’m a dentist in California, should I not get a share of the business? Or what if the son in the business gets gifted the business? There are a lot of emotional ticking time bombs in family businesses that create litigation. The most shining example of that would be the Koch brothers, who had the largest family-owned business in the United States, and feuded for decades.
Q: In the case of Brooke Astor, there was fraud. Does that happen much?
A: I see a lot of these cases. When mom is alone and weak, and one child starts caring for her, somewhere along the line they start thinking they are entitled to more than their fair share. So the person will go to UBS or Morgan Stanley, and say, ‘Mom wants to change title from her to me because I’ll be dealing with this day-to-day, and I’m paying for her care, and she wants me to watch her portfolio.’ Invariably, what gets left out of the conversation is that because these are now jointly-titled assets, they will pass to that child, and that is also the intent of the antagonist. The titling of accounts trumps the terms of the will.
Q: So you could have a very good will, and it will end up being meaningless?
A: Correct. I can give you an example where there’s no glitz and no glamour. I handled a case involving a guy who never had any money, but was an inventor, and when he was 76, his invention hit, the company went public, and he was worth $50 million. The wife had the account retitled for his name and her name. When he died, the kids thought they were going to get the motherlode, but everything went to the wife.
Q: Is litigation over estates going up?
A: There’s not a doubt in my mind that it is. I’ve asked surrogate judges informally in chambers, and they all say the same thing. The incidence of probate litigation is on the rise, and the fact patterns are consistent.
Q: What would you do to avoid these situations?
A: If there’s a second spouse, make sure to give that spouse what was bargained for in the (prenuptial agreement). Where there is a likelihood of dissension, appoint an independent fiduciary or trustee. And for the family business, you really want to document your intentions so that if you are giving an interest to one child, and not to the other three, there is no mystery. If you are appointing one child to be CEO, write it down and explain it to everyone. Don’t leave it to chance, or to petitions filed in court.
Q: The cases you point to entail significant amounts of money. What about for folks with smaller estates, who won’t be affected by any estate-tax issues, and so might not have planned as carefully?
A: This is not just about the money. It’s about who’s living in the house? Where’s mom’s engagement ring? Where are her photo albums? This is not just something for millionaires. It is day-in and day-out, Main Street-type stuff. It’s not unusual nowadays for a grown child to be living with mom and dad. If the second spouse dies, and the kid’s still living in the house, the other siblings may battle because the house is worth $300,000. It’s not so much about the money, but that the situation is bad. It would be better to have a will that says, the house is valued at $300,000, and the son who is living in it gets it, but he has to take out a mortgage and give the other siblings $150,000. You need to address it. These issues are not unique to people having money. They are common issues.
(Editing by Beth Pinsker Gladstone and Jan Paschal)
(The author is a Reuters contributor. The opinions expressed are her own.)
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French breast implant boss arrested
MARSEILLE, France (Reuters) – Jean-Claude Mas, the Frenchman who sparked a global health scare by selling substandard breast implants, was arrested on Thursday as Marseille prosecutors build a case against him for manslaughter.
In the first arrests since the two-year-old scandal made headlines worldwide in December, Mas and a second executive at his now defunct company Poly Implant Prothese (PIP) were seized at their homes in southern France shortly after dawn.
The detention could lead within hours to Mas being placed under formal investigation on suspicion of manslaughter and causing bodily harm. That could in due course lead to criminal charges, which would carry longer sentences than those he now faces in a fraud case expected to be tried around October.
Women who have been campaigning against PIP since French authorities banned its products nearly two years ago welcomed the move as giving them a sense that the law was now in action:
“It’s been too long,” said Murielle Ajellio, who heads an association for women with implants. Up to now, she said: “You feel like you’re fighting against the wind.”
French authorities have been criticized for being slow to react to a case that has sown fear among tens of thousands of women who carry PIP implants. French inspectors ordered them off the market in March 2010, due to concerns over their quality.
But only last month did officials in Paris recommend their surgical removal, drawing attention to the problem for patients worldwide who had been fitted with products from the company, which was at one time the third biggest global supplier.
Lawyers for women in France who have filed complaints over PIP implants welcomed the arrests and said there must be no escaping justice for the 72-year-old Mas, who has been quoted as deriding those suing him as being motivated only by money.
“This is a comfort for the victims,” said Laurent Gaudon, whose clients are pursuing PIP and surgeons who used its implants for fraud. “It’s the feeling that justice is advancing and they have not been forgotten. It’s the assurance that the guilty are at last going to be held accountable.”
Philippe Courtois, who represents 1,300 people with PIP implants, said Mas should not be freed pending any trial.
Mas and PIP’s former chief executive Claude Couty were questioned at home, as police conducted searches. They were then moved to police custody in the Mediterranean port city of Marseille, under the orders of prosecutor Jacques Dallest.
SUBSTANDARD SILICONE
PIP enjoyed years of success with international sales, but behind the scenes employees, and Mas himself, have admitted to hiding from certification agencies the fact they were using cheap, industrial silicone, not approved for medical use.
Health authorities in France and elsewhere have stressed that PIP’s products carry no proven link to cancer, but surgeons report that they have abnormally high rupture rates. Responses to the problem have varied among different foreign authorities.
Thursday’s arrests follow an investigation opened in Marseille, close to PIP’s former premises, on December 8 after the death from cancer in 2010 of a woman with PIP implants.
Mas and Couty can be held for up to 48 hours while a judge decides whether to open a formal probe and, if so, what bail conditions, if any, to set.
A trial date could be years away, given the extent of inquiry required, but the graver manslaughter case could make it harder for Mas to avoid appearing in court later this year on other charges of fraud and deception.
That latter case targets half a dozen former PIP executives and could also carry prison terms for them of several years. It has dragged on as investigators have had to quiz up to 2,700 women who have filed complaints over PIP implants.
Mas, who sold some 300,000 implants around the world, has acknowledged that he used unapproved silicone but dismissed fears that it constituted a health risk.
Earlier in January, leaks from a police document showed Mas admitting to lying about the quality of PIP’s implants and describing the women filing complaints against him as just seeking money. The comments sparked public anger against him.
PIP closed down in March 2010 after regulators discovered it was using a non-approved, industrial silicone gel, and pulled its implants off the market.
Last month, the French government advised women with PIP implants to have them removed, and said it would pay for the operations in France, sparking alarm around the world.
Officials in several other countries, including Britain and Brazil, have asked women to visit their doctors for checks.
France has called for tighter European Union regulations on medical devices in wake of the PIP affair, saying suppliers of prosthetics should require the same sort of authorization as manufacturers of prescription medicines.
(Writing by Catherine Bremer; Editing by Alastair Macdonald)
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Six new breeds to debut at Westminster Dog Show
NEW YORK |
NEW YORK (Reuters) – Six new breeds of dogs, including Mexico’s hairless Xoloitzcuintli, the Finnish Lapphund and the Norwegian Lundehund, will be competing in the 2012 Westminster Kennel Club Dog Show next month.
They will join other newcomers, the Cesky Terrier, the American English Coonhound and the Entlebucher Mountain Dog, along with 179 other breeds and varieties vying to be named Best in Show on Feb 14 at the annual New York event that started in 1877 with 1,201 dogs.
This year’s entries for the 136th show will be limited to 2,000 dogs.
“We will have at least two dogs in every breed, including the new ones,” said David Frei, the Westminster Kennel Club’s director of communications and USA Network host.
“New breed is a little bit of a misnomer because a lot of these breeds have been around for hundreds, or even thousands of years in some of the cases,” he told Reuters.
Before being included in the show, the breed must meet American Kennel Club (AKC) rules including having sufficient numbers in the United States, a certain geographical distribution and a parent club that makes sure they are following responsible breeding practices and meet certain characteristics.
“It is really an AKC decision, not ours,” Frei said, adding that in the past 23 years, more than 40 breeds have been added to the show.
Among the more striking newcomers is the Xololitzcuintli, the national dog of Mexico, which was previously known as the Mexican Hairless and comes in three sizes.
“These dogs are descended from hairless dogs prized by the Aztecs and revered as guardians of the dead. Over 400 years later, these dogs were still to be found in the Mexican jungles,” according to the Westminster Kennel Club.
Xoloitzcuintli expert Amy Fernandez said the decision to include the breed is long overdue. She has been working to get them included for 28 years.
“It is an ancient dog and probably the oldest breed in North America and its history dates back about 3,000 years,” she said. “It has been recognized in almost every country in the world for many years and the U.S. has been the only holdout.”
Fernandez, who admitted that the hairless breed is not to everyone’s taste, described the dogs as very watchful, sensitive and great with children.
But with such stiff competition Frei said the odds of a rookie taking the top prize are “pretty long.”
“The shortest time between a breed competing at Westminster and winning best of show is 27 years,” said Frei. “That was the Bichon Frise. It had its first year in 1974 and won best in show in 2001.”
Last year’s winner was a Scottish Deerhound named Hickory.
(Reporting by Patricia Reaney; editing by Bob Tourtellotte)
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Gaultier fetes Winehouse, Givenchy goes futuristic
PARIS |
PARIS (Reuters) – Jean Paul Gaultier delivered an ode to Amy Winehouse at his spring/summer 2012 haute couture show in Paris on Wednesday. The late pop singer’s musical spirit and bad girl fashion sense were all over the runway.
“No, no, no,” sang the four male Afro-American acapella singers who kicked off the show, using Winehouse’s husky battle cry “Rehab” as a backdrop to 1950s and 60s-inspired looks.
Sporting pink, red, blonde and black beehives, the leggy models with thick cat-eye eyeliner sported lots of lace, sequins, peek-a-boo skin — and even cigarettes.
A shocking canary-yellow sequined blouson was paired with an equally bright turquoise slim sequined skirt in a sexy look worthy of 50s pin-up girl Betty Page.
Another seemed tailor-made for a gal with a hangover who doesn’t want to get out of bed: a satin peignoir in a printed marquetry fabric worn over a jewel-encrusted bustier.
Winehouse, who died in July from alcohol poisoning, was known for her rich voice, songs that recalled 1960s girl bands, her towering hairstyle and struggles with drugs and alcohol.
The singer’s voice on her best-selling hit “Back to Black” filled the vast room at the end of the show as models with veils covering their faces filed past guests such as Catherine Deneuve and burlesque star Dita Von Teese.
At Givenchy, tough was also on the menu, but designer Riccardo Tisci used beading, heavy embroidery, and animal skins to create armor-like dresses and jackets.
The atelier showed 10 looks on Tuesday inspired by Fritz Lang’s 1927 film “Metropolis.” Hints of Art Deco design on collars and sleeves gave way to a hard-edged, futuristic sensibility.
A black jacket, like a suit of armor, was stitched from thousands of tiny black beads with a black crocodile overlay. Stars adorned the back of the jacket, while swirls of flowers at the cuffs were sewn from individual scales. The overall effect was a Gothic armadillo meets Mad Max.
In another look, the skin of a crocodile was literally recreated, scale by scale, on a woman’s body, held in place by invisible tulle. Wrapped around the waist, resembling a Japanese obi, was the animal’s spine, with two tails creating the belt.
Even the design on a flowing white skirt resembled scales, sewn via tiny transparent sequins and set off with a bold, silver chain connecting the skirt to the shoulder.
For the top, Tisci played it simple, choosing a classic white t-shirt — a look, in fact, that Winehouse may have approved of.
(Reporting By Alexandria Sage, editing by Paul Casciato)
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Arab Spring and U.S. reforms make Cuba a tourist hotspot
HAVANA |
HAVANA (Reuters) – The Arab Spring, changes in U.S. policy and economic reforms at home are driving a tourist rush that is giving communist-run Cuba one of its best seasons ever and stretching its ability to accommodate demand.
Hotels are full to the brim and Old Havana, the capital’s historic center, is teeming with tourists from around the world, soaking up the warm winter sun in outdoor cafes and strolling through narrow colonial streets.
Along the nearby Malecon, Havana’s seaside boulevard, 25 buses were lined up on a recent sunny day, waiting to carry visitors to their next destinations.
At the Bodeguita del Medio, where Ernest Hemingway supposedly drank mojitos and tourists now go to emulate him, almost as many people stood on the stone-paved street waiting to get into the jam-packed bar as were squeezed inside.
“We are at capacity. The beach resorts, Havana city are totally full. In the interior of the country, there is nowhere to find a room, nowhere,” said the manager of a foreign hotel company.
Like most other people interviewed for this story, the manager asked not to be named to avoid problems with the Cuban government.
Cuba just completed its best year for tourism with 2.7 million visitors in 2011, and experts say current bookings suggest it will almost certainly beat that number in 2012.
“I think 2012 will be a very good year and I see real difficulties in how to organize and manage all this in 2013 and 2014,” said the head of a European travel agency’s Havana office.
Tourism is a top hard currency earner for the cash-strapped Caribbean island, with revenues of about $2.3 billion in 2011.
Travel experts say there is continued growth in the number of visitors from Canada, by far the biggest market for Cuba, and rising numbers from countries such as Russia and Argentina.
This high season has also seen a resurgence in visitors from Europe, where numbers had fallen off in recent years, as many people who usually go to North Africa for a winter vacation are now looking elsewhere because of security concerns following the Arab Spring uprisings last year.
The political stability and lack of crime in tightly controlled Cuba are as attractive to them as the island’s beautiful beaches.
“It’s just a sort of insecurity. Especially in the German market, if there is a crisis somewhere, they immediately stop going. Cuba is viewed as safe,” said the travel agency head.
“You want security, that’s Havana. I would estimate that from France alone tourism to Cuba is up 20 percent largely because of events in North Africa,” said the hotel company manager.
He said Egypt, where tour packages are comparably priced to Cuba and political unrest continues, is losing the most customers to the Caribbean island.
AMERICANS IN HAVANA
Cuban Americans have been flooding into Cuba since U.S. President Barack Obama lifted restrictions for them to travel to their homeland in 2009.
Cuba has not released its yearly tourist numbers by nationality for 2011, but unofficially 375,000 Cuban Americans were said to have come to the island in 2010.
Mostly they stay with family members and are not the ones filling up hotels, but they do rent lots of cars.
They are known to sometimes burn cigarette holes in the seats in a show of spite for the government they or their family fled from, and for the extremely high prices it charges for rental cars, said one of the travel industry experts.
But now the number of other American visitors is climbing after Obama changed regulations in 2011, making it easier for non-Cuban Americans to enter a country the U.S. trade embargo has generally made off-limits in the past 50 years.
“I’m having enormous difficulty finding places for my customers. It’s the Americans, they’re getting all the good beds,” complained a Cuba travel company owner, referring to rooms in the best hotels.
Around Havana, it has become more common to see Americans on the streets and in restaurants, although they are somewhat isolated from other tourists because the new regulations require that they come as part of tours that are supposed to be educational and “purposeful,” not recreational.
“I keep hearing there are a lot of Americans, but I haven’t seen that many around,” said a New Zealander.
In pursuit of what is known as “people to people” contact, they spend their days visiting museums, schools, hospitals and tobacco farms with only a limited amount of time for wandering about.
Americans approached in Cuba to discuss their experience tended to be reluctant to talk and in some cases defensive, apparently fearing retribution from their government.
“We don’t want to advertise that we’re here. I don’t think that would be very smart,” said an elderly man as he quickly walked away toward the safety of the Hotel Nacional.
Cuba says that, excluding Cuban Americans, 63,046 Americans visited the island in 2010.
The U.S. government began issuing licenses for Cuba travel under the new rules last summer and most organizations that got them had to spend several months gearing up.
“I think right about now the American groups are starting to come,” said Tom Popper, director of U.S. travel company Insight Cuba. He said demand has been strong, and that his group has already brought or signed up 2,200 people for trips.
The National Geographic Expeditions website shows that it has 17 tours of Cuba planned from now through May and all are totally booked.
For Americans, the attraction of Cuba is partly that it has been forbidden fruit for so many years, Popper said.
But for them and others, President Raul Castro’s campaign for economic reform is a drawing card as well.
ECONOMIC REFORMS
Under the changes, Cuba is moving away from its stumbling, Soviet-style economy into a communism where private initiative is encouraged and the role of the state lessened. More than 350,000 people now are self-employed, private home-based restaurants are mushrooming and cars and houses can be bought and sold.
“Many people are coming because they want to see Cuba as it has been and is, the old cars and that sort of thing, but they are also curious because they read a lot in the papers about things changing and they want to see that, too,” the European travel agency director said.
At the ornate Museum of the Revolution, once Cuba’s presidential palace, tourists pause to see the Granma, the yacht that Fidel Castro and his fellow rebels sailed from Mexico in 1956 to start the revolution.
“My family thought Fidel Castro was wonderful and supported the revolution. I wanted to see it now, before it changes too much,” said Argentine Abel Castano as he looked at the boat, now in a glass-enclosed exhibit on the museum grounds.
The restaurants, or paladares, are at the top of many tourists’ must-see lists because they offer a unique experience of dining out in someone’s home and because their food also is usually better than the dreary fare at most state restaurants.
For those in the travel industry, Cuba’s success is a blessing and a curse. Sales are good and profits are up, but the demand has put a spotlight on the need to expand and improve the tourist infrastructure, especially in the cities.
Faced with more tourists than rooms last month, the government took the unprecedented step of allowing two travel companies to put their groups in private homes that rent rooms, said the hotel company manager.
And overbooking, especially at the better hotels, is forcing a scramble to find bumped tourists a place to stay. “I do this every day and every day it is terrible,” the hotel company manager said.
Cuba’s best hotels are not considered equal to the best in other countries and standards drop quickly into mediocrity or worse, depending on price and location. Some are poorly maintained and don’t have hot water.
Even at the landmark Hotel Nacional, a recent American visitor complained that his room was “dank” and had a few roaches.
Popper said he tells his tour groups that “all the hotels in Cuba are safe and clean, but coming to Cuba isn’t about staying in your hotel, it’s about being in Cuba. You need to have the mindset to just go with it.”
Cuba has invested heavily in building beach hotels, but in Havana and popular tourist destinations like Cienfuegos and Trinidad, many more rooms, particularly of good quality, are needed. The tourism ministry says there are 52,000 hotel rooms, of which 65 percent are supposedly four- or five-star quality.
“We need more hotels and we need more four-star hotels,” said the travel agency director, who estimated that Havana alone needs 2,000 additional rooms.
The travel agency director said the government has moved too slowly to prepare for the tourist boom, and “we will have five years of difficulty” while more hotels are built.
“Business will be good for everybody because people are coming in, but everybody will have to fight for rooms. And I suppose prices will go up,” he said.
(Editing by Tom Brown and Kieran Murray)
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