Death and Taxes - The Blog

Negotiation and the Value of Reasonableness

It's easy to get worked up if you are involved in probate litigation.  Things tend to get very emotional.  There are cases where somebody involved -- a trustee or other family member -- has done something really evil.  But there are a lot more cases where emotions simply run high and the folks involved act like the other side is evil, even if they aren't.

Good probate lawyers aim to give their clients tangible success -- removing a bad trustee, getting the share of the estate they deserve, etc.  But some clients want intangible benefits -- "piece of mind," or "a sense that justice has been done," or "the knowledge that I 'won'."  I'm hesitant to get involved in cases where these types of intangible benefits are sought, mostly because what I'm supposed to do gets so convoluted.  It's also difficult to work with very emotional clients.  They tend to be all over the map -- first they want this, then they want that, then they want to do away with any negotiation and simply "sue the bastards."  That wastes a lot of time and money -- do you really want me to bill you at my ($200) hourly rate for listening to you rant about your "no good" sister?

I think in terms of money, and in terms of alternatives.  This comes from my training as a mediator.  If the question is "to settle or not to settle," then what's your BATNA (Best Alternative To a Negotiated Agreement)?  What's your WATNA (Worst Alternative To a Negotiated Agreement)?  I spend a lot of time explaining to my clients what will happen when or if we go to court.  Court does offer some benefits, but there are also the drawbacks (in terms of costs and time).

Of course, there are drawbacks to a negotiation as well.  You may not walk out feeling as though you "won."  You may feel like you shouldn't have been forced to compromise with the "devil" on the other side.  But if your goal is to bring a probate matter to a close, and to move on, then maybe negotiation will work for you.  Even if it means you have to let go of some of your vitriol.

John Donovan's Estate of War, and Irrevocability

Saturday's Wall Street Journal featured a lengthy article about John J. Donovan Sr., described as "a wealthy technology consultant and entrepreneur."  The article details a lot of family intrigue, including allegations of sexual abuse by one of Mr. Donovan's daughters, and a shooting incident that was possibly masterminded by one of Mr. Donovan's sons -- or by Mr. Donovan himself.  The article is here, but available only to subscribers.

Is Mr. Donovan a disturbed, evil man?  Or are his children simply being greedy and taking advantage?  It's impossible to tell from the article, but one aspect of the dispute caught my attention:

In the early 1990s, Mr. Donovan established two trusts in Bermuda, naming his children as beneficiaries.  The trusts were designed, among other things, to shelter his wealth from taxes and to assist with estate planning, according to his lawyers.  Mrs. Donovan says her husband believed the money would be used to start companies and create wealth.  He wanted some of the money going to the kids, but most to charities, she says, although those goals were not incorporated into trust documents. The trusts were structured so that trustees in Bermuda had discretion over them, and Mr. Donovan's permission wasn't required for his kids to tap the money, according to lawyers for both Mr. Donovan and his children.  According to his lawyers, the trusts eventually contained more than $100 million in cash and securities. (Emphasis added)

Mr. Donovan apparently set up an irrevocable trust for his children.  Once set up, such a trust is irrevocable, which means you can't change it or revoke it.  If Mr. Donovan wanted to give "most" of the trust funds to charities, he could have done so before he signed the trust agreement.  He didn't. 

It may seem strange, but the word "irrevocable" tends to be a hard one for clients to grasp.  People who set up irrevocable trusts almost by definition have a lot of money and a fair amount of sophistication, but estate planners like to trade stories about clients who call and ask "how do I amend or revoke my irrevocable trust?"  The answer is, "you don't."

ADR-related Blogs

As a part of my survey on probate mediation, I was planning a post on ADR (alternative dispute resolution) websites generally, with a focus on ADR blogs.  However, given that I'm new to the area of ADR, I thought it might be a bit silly (not to mention cheeky) for me to try to give an overview of the available resources.  Luckily someone with a lot of knowledge in the area -- Diane Levin of the excellent Online Guide to Mediation -- has prepared a directory of ADR blogs. Ms. Levin's introductory post on the topic is here; the actual directory can be found here.   Death and Taxes even gets a mention as being ADR friendly!

Mediation in Estate Planning and Probate: A Survey (Part 2 - Court Links)

I'm compiling a survey of estate planning and probate-related mediation resources (mostly of the on-line variety), and will be posting the results here in the near future.  Here's my plan for this survey:

Part 1 (yesterday): Articles about estate planning and probate-related mediation (if an article is available on-line, you can click on the word "link" following the article citation to access it)

Part 2 (today): Links to court probate mediation programs

Part 3: Links to websites that relate to probate mediation

I view all of these parts as works in progress -- I'll be supplementing the lists as new items come to my attention.  If you think I'm missing a link, please let me know!

ARIZONA

-Maricopa County

HAWAII (pdf)

ILLINOIS

-Cook County

MICHIGAN

-Genesee County

-Oakland County (pdf)

NEW HAMPSHIRE

UTAH

WASHINGTON DC