Monday, October 12, 2009

Estate Planning in the National News: Brooke Astor

Since Brooke Astor's death in 2007, there has been contentious civil and criminal litigation regarding the distribution of her estate.

Last week, Astor's estate -- and the cast of intriguing family members, charities, and attorneys with a stake in its disposition -- were back in the news, in a major way, with the criminal conviction of her son.

Samples of the coverage are here (New York Times), here (Washington Post), and here (Wall Street Journal).

When Astor's son Anthony Marshall was initially arrested in November 2007, Manhattan District Attorney Robert Morgenthau stated that "Marshall and Francis Morrissey (an attorney who represented Mrs. Astor in connection with her estate planning) took advantage of Mrs. Astor’s diminished mental capacity in a scheme to defraud her and others out of millions of dollars ... Marshall abused his power of attorney and convinced Mrs. Astor to sell property by falsely telling her that she was running out of money."

Last week, Marshall was convicted on 14 of the criminal charges related to defrauding his mother, including a conviction for grand larceny related to a retroactive $1 million raise that Marshall gave to himself as his mother's power of attorney. He faces up to 25 years in prison, though it sounds as though he's likely to appeal the convictions.

Now that the criminal trial is complete (pending the posibility of appeal), the action will shift back to the Westchester County Surrogate's Court, where the primary issue will be whether Mrs. Astor had testamentary capacity to execute her 2002 will.

The 2002 document gave Mr. Marshall greater control over a larger portion of Mrs. Astor's property, as compared to her prior will (executed in 1997), which left a larger share of the property to charities including the Met and the New York Public Library and which left Marshall's share in trust.

Commentators writing about the criminal conviction last week generally agreed that the 2002 will is less likely to be deemed valid in light of the judgment against Marshall. However, it sounds as though the issue may ultimately be settled out of court.

The stakes are large: Mrs. Astor's estate was valued at approximately $180 million and several of the charities stand to lose in the range of $10 million if the 2002 will is deemed valid.

Whether an individual has the "testamentary capacity" to execute a valid will is often described, in popular culture, in terms of whether the person is "of sound mind."

In Virginia, the testamentary capacity determination includes an assessment of whether the person actually understands the nature (and extent) of the property he possesses and the way that the will purports to distribute that property.

Interestingly (and importantly) the legal capacity to enter into a valid contract and the legal capacity to make a valid will do not necessarily equate in all cases. Moreover, as the Astor litigation is showing, a determination of testamentary capacity is not always clear cut (particularly when one or more potentially-benefiting parties believes, rightly or wrongly, that the testator was unduly influenced or defrauded).