Fleming & Curti, P.L.C. - Queen of Mean’s Will Spells Trouble For Grandchildren

SEPTEMBER 3, 2007 VOLUME 15, NUMBER 10

Queen of Mean’s Will Spells Trouble For Grandchildren

From the Interesting Wills of Famous People Department: the late Leona Helmsley has left $12 million to Trouble, her 8-year-old Maltese. Trouble’s trust fund, originally established in 2005, will assure that the dog lives more than comfortably for the rest of her life; when Trouble dies, she is to be buried next to Ms. Helmsley in the family mausoleum in the Bronx.

Ms. Helmsley was famously nicknamed “The Queen of Mean” more than two decades ago after her tax-dodging behavior earned her an indictment and conviction. “Only the little people pay taxes,” she was quoted as saying at the time. Despite the fact that her will leaves the bulk of her estate to a charitable organization formed in her name (along with that of her late husband, Harry Helmsley), her estate will pay millions in estate tax. Since the total estate is estimated at $4 billion, perhaps she no longer cared about that possibility.

Her bequest for the benefit of Trouble throws some light on a planning issue facing millions of ordinary (dare we say “little”?) people: what can you do to assure that beloved pets will be properly cared for after you die? Like Ms. Helmsley (though perhaps less extravagantly), you might leave money in trust for the pet’s benefit; in Arizona, as in New York, one can leave money to what has historically been called an “honorary” trust for the benefit of a pet. Or you might look to family or friends, perhaps leaving a stipend to someone conditioned on their willingness to take over care of the pet. Or you might consider the Humane Society of Southern Arizona’s “Guardian Angel” program, by which that organization agrees to place your pet for a $2,500 bequest, and even monitor its care for a total $10,000 bequest.

But there is more interesting material in Ms. Helmsley’s will. She also establishes a $5 million trust each for two of her grandchildren (the other two are completely disinherited) and for her brother. The trusts provide payments of 5% of the principal value each year, with the remainder to be distributed to the Helmsley charitable fund on the death of each recipient. The most interesting thing about those trusts: neither grandchild is to receive the 5% annual payments unless they have signed the guest register at their late father’s grave in the family mausoleum, preferably on the anniversary of his death. This type of trust is often referred to as an "incentive" trust, since it provides a financial reward for behavior the decedent had wanted to encourage.

Ms. Helmsley's will sheds no light on the disinheritance of two of her grandchildren, other than to say that it is "for reasons which are known to them." Was she required to leave something--say $1.00, or a peppercorn, or something nominal--to those grandchildren? No, though that is a common misconception. She probably only mentioned their names to foreclose the possibility that either might claim she was so confused at the time that she forgot she even had four grandchildren. It does not matter even if her disinherited grandchildren genuinely have no idea why they were disfavored. Her will also includes an "in terrorem" provision disinheriting any beneficiary who attempts to contest the will. That provision, or course, might deter those who receive benefits, but it would not discourage the two disinherited grandchildren, since the threat of disinheritance is hollow when issued to those who have already been disinherited.

This being the age of the internet, Ms. Helmsley's will is of course available online. As you can read, it provides another $5 million outright to each of the favored grandchildren, plus another $10 million outright to her brother. She also leaves another $3 million in a so-called “perpetual care” trust, to provide for annual acid-washing or steam-cleaning of the family mausoleum. Any excess in the perpetual care trust, along with the remainder in each of the trusts at the death of her brother, her grandchildren, and Trouble, is to be returned to the family charitable trust.

Ms. Helmsley's will invites scrutiny both for its human drama and for its illustrative legal provisions. It blends charitable remainder trusts, an honorary pet trust, a perpetual care trust, incentive trusts, an in terrorem provision with healthy doses of speculation and pathos. F. Scott Fitzgerald observed (in "The Rich Boy") that the very rich "are different from you and me." Despite Hemingway's celebrated rejoinder ("Yes, they have more money"), Fitzgerald may have been closer to the mark.