Boston, MA (Top40 Charts/ Estate Street Partners) On February 27th, 2013, the Supreme Court of South Carolina [In re: Estate of Brown, 022713 SCSC, 27227, (2013)] decided part of the $100 million estate settling saga of
James Brown and his irrevocable trust's against his girlfriend, Tommie Rae Hynie, five of his six children and the Attorney General of South Carolina.
"Sometimes, even with competent estate planning, greedy people and confused courts can tie up assets for years," explains
Rocco Beatrice, Managing
Director of Estate Street Partners, LLC. "In this case, the court fixed what I consider to be a huge affront to Mr. Brown's wishes and the estate planning profession."
According to court documents,
James Brown, for many years, drafted, redrafted, corrected, and finalized his last wishes. "The hardest working man in show business, worked just as hard to make sure his assets and self directed investments were distributed according to his wishes. His smart use of irrevocable trusts guaranteed that his wishes would be carried out," opines Mr. Beatrice.
"Irrevocable trusts are one of the, if not the, most powerful tools in an estate planners arsenal."
According to court documents, Mr. Brown's trusts and will, completed in the year 2000, memorialized that some of his $100 million estate would go to his children, to the education of his grandchildren, and the largest part, to the education of poor children. None was to go to any former, current, or future wives, and the documents included a clause cutting out anyone challenging them.
Later, Mr. Brown, according to court documents, had Tommie Rae Hynie, sign a prenuptial agreement saying that she had no interests in his estate in the event of divorce or death; Signing the agreement prior to their marriage.
According to court documents, Mr. Brown subsequently discovered she was still married from a prior marriage and attempted to annul it. Ms. Hynie counter-claimed divorce and Mr. Brown added a paternity test for Ms. Hynie's son. Eventually all parties waived their claims to the paternity test and marriage and Ms. Hynie agreed to "forever waive any claim of a common law marriage." She agreed and they continued to have a relationship until Mr. Brown died in 2006.
When Mr. Brown died, according to court documents, five of his six children (the beneficiaries of the will) and Ms. Hynie brought actions against the irrevocable trusts siting "undue influence."
"Undue influence is often used to discredit estate planning documents," explains Mr. Beatrice, "If a person was threatened or in any other way had their free will to negotiate taken away, all documents may be voided."
According to court documents, presumably to protect the charitable donation, the South Carolina Attorney General brokered an agreement between the beneficiaries and Ms. Hynie including the restructuring of the trusts, giving additional assets to Mr. Brown's children and Ms. Hynie by inexplicably reducing the amount given to the underprivileged child education fund.
The Attorney General and the lower court even replaced the trustees picked by Mr. Brown and created a new similar trust for the underprivileged children, voiding Mr. Brown's original trust.
The Special Administrators appointed by the lower court astutely appealed to the Supreme Court of South Carolina and won.
"The first thing the Supreme Court decided was well known by
James Brown's fans: Mr. Brown knew what he was doing, took orders from no one, was not under anyone's influence, and devised his estate plan exactly the way he intended," asserts Mr. Beatrice.
According to court documents, the court reasoned that plaintiffs needed a vehicle to challenge the estate plan and used "undue influence." The Attorney General, possibly unwittingly, helped by not investigating the charges thereby not allowing the court decide the merit.
As for Ms. Hynie, the court recognized the prenuptial agreement and did not recognize the marriage. The court upheld the intentional omission of spouses in the documents, including Ms. Hynie.
"When wills and irrevocable trusts are designed and drafted to exclude a person who would collect under the laws of intestacy, an estate planner must make sure that the excluded persons are mentioned and dismissed in the documents," warns Mr. Beatrice, "One needs an experienced drafting team, a team that knows the system and how it works."
Finally, according to court documents, the court challenged the Attorney General's restructuring of Mr. Brown's irrevocable trusts. The court reasoned that a settlement between the beneficiaries, such as the one brokered by the Attorney General might discourage others from planning their estates.
"Look, if estate documents such as irrevocable trusts can be broken after death, what good are they?" exclaims Mr. Beatrice, "The Attorney General shouldn't be able to change an irrevocable trust. Mr. Brown's wishes were not being met. A will and an irrevocable trust, if written correctly, should be bulletproof and explain exactly where the assets go."
The Supreme Court of South Carolina sent the entire proceedings back to the lower court.
"My evaluation of Mr. Brown's estate planning is very positive," postulates Mr. Beatrice, "Mr. Brown needed the kind of protection an irrevocable trust offers. The beautiful thing about irrevocable trusts are that anybody, no matter how large or small their assets, can benefit. Now I wonder if the lower court will disinherit all of them for challenging the will and trust. Those underprivileged children could get quite an education for $100 million!"
