Friday, March 1, 2013

Someone Will Cry, Cry, Cry

It has been a busy month for the James Brown estate.  First a federal court rejected the attempt of his former manager to insert herself into his estate affairs.  Now, the South Carolina Supreme Court has rejected a settlement regarding the division of his estate that was brokered by the SC Attorney General and said that the estate must be distributed per Mr. Brown's will (i.e. most to the trust for its charitable beneficiaries).

Quick facts.  The Godfather of Soul left most of his estate to a trust for the education of needy children.  His relatives asked the probate court to remove the trustees of the trust after the trust assets dissipated to almost nothing.  I suspect that they also challenged the terms of his will.  The SC Attorney General (on behalf of the trust) convinced the parties to settle the dispute with  the trust receiving half of the assets, Brown's widow 1/4, his adult children the final 1/4 and the trustees replaced by other trustees who made lucrative licensing deals for the trust.        

Several points:

1.   The SC Supreme Court is correct - the terms of the will should be followed.  Estates are not like other business deals or disputes where the intent of the deceased can be negotiated.  The intent as expressed in the will must be followed.  Otherwise, people would not have confidence in making wills or leaving assets to charity.

2.  The settlement does seem to have been beneficial to the estate because the new trustees were able to increase its value from near zero to somewhere between $5 million and $100 million (nice specificity on that).

3.    The estate owed $20 million to a bank borrowed for a European tour.  Apparently lunacy in the lending markets in 2006 was not confined only to the sub-prime housing market.