The $275 million estate of the late singer Jimmy Buffett has been thrown into the spotlight as the two co-trustees of the marital trust he left behind get ready to battle it out in court. Buffett, who amassed his fortune by building a business empire based on his lifestyle, likely did a lot of meticulous estate planning, leaving behind a will that was last amended in 2023, the year of his death, as well as a marital trust, to be funded by a bulk of his assets, for his wife’s “sole benefit of her lifetime.”
Animosity Between Trustees
Unfortunately, Jimmy might not have anticipated the animosity between the two appointed trustees—his wife, Jane Buffett, and his longtime accountant, who served as his business manager and financial advisor, Richard Mozenter.
It’s relatively commonplace for grantors to name an additional trustee who’s a better fit to handle the assets, as sometimes heirs aren’t prepared to manage the wealth they’re inheriting. This might be the case here, as Richard stated that Jimmy “repeatedly expressed his concerns regarding Jane’s ability to manage and control his assets.”
While he was trying to look out for Jane’s best interests by assigning a co-trustee to help manage the assets, it appears that the lack of control has struck a chord with Jane and sent her over the edge. In her petition, filed in Los Angeles, to remove Mozenter, Jane alleges that Richard has refused to provide basic information about the trust and has been nothing short of hostile in response to her request for information, directing her to Jimmy’s estate tax return as an answer. She also accuses him of mismanaging trust assets and collecting excessive fees, alleging that Richard advised her that the trust would earn less than $2 million in net income for the year and to consider selling her own real estate to maintain her standard of living.
Richard, meanwhile, has filed a petition in Palm Beach County, Fla., where Jimmy’s estate is in probate. The petition alleges that Jane has been uncooperative in his efforts to manage the trust, interfered in business decisions, breached her fiduciary duties and “acted in her own interest.”
While appointing co-trustees can be beneficial in theory, as co-trustees share the fiduciary duties of managing and distributing the assets, which is often easier than saddling one individual with all these duties, problems usually erupt when the co-trustees don’t see eye to eye. As apparent in this case, these conflicts aren’t limited to instances where siblings or family members are named. Whether the benefits of appointing co-trustees outweigh the negatives has been the subject of much debate. With the great wealth transfer underway, the subject of contentious co-trustees, as well as some other pitfalls, even in the best estate planning, will continue to be brought to the forefront.
Neutral Fiduciary
One solution popular among estate planners and judges is appointing a neutral professional fiduciary as trustee. It’s also best practice for clients to discuss their choices with their heirs. It’s unclear whether Jimmy discussed the addition of a co-trustee with Jane prior to his death. As a last resort, leaving a “removal right” to allow beneficiaries to replace a trustee under certain circumstances could also help avoid a drawn-out legal battle.
According to Variety, Jane has a co-trustee in mind—Daniel Neidich, CEO of Dune Real Estate Partners—to replace Richard. Once the proper jurisdiction is determined (since Jane and Richard filed in different jurisdictions), it will be up to the courts to determine the best course of action. “Typically, this may be a long, drawn-out court battle with serious accusations raised in the complaint,” said Patrick D. Owens, shareholder in Buchalter’s Chicago office and a member of the Tax, Benefits & Estate Planning and Litigation practice groups. As for whether judges tend to side with spouse co-trustees, “Judges will usually take an unbiased look at the actions of the trustees. The judges will also often favor the choice of trustee of the grantor of the trust,” added Owens. It’s also important to keep in mind that protracted litigation can deplete assets in the trust, as trustees can likely use trust assets for their legal defense, Owens explained.
Excessive Fees
Given the size and complexity of the estate involved, a court may not find Richard’s fees excessive, as Jane claimed. As for the projected low returns, that may also not be determined to be unusual when dealing with assets such as real estate, planes and cars (part of Jimmy’s extensive portfolio), which don’t produce income but cost money to maintain. “Both trustees may consider resigning in favor of a corporate trustee who may be best suited to handle this large of an estate with some complex assets,” reasoned Owens.
#CoTrustees #Clash #275M #Trust