Buzz Aldrin walked on the moon. He was part of the Apollo 11 space mission. He is a national celebrity who has continually promoted space education and exploration. Asked what he thinks when he looks up, Aldrin said, “the moon I see now is the same moon I saw before. Except that before, when I looked at it, it was in anticipation of what it would be like when I got there. That’s behind me now.” An interesting quote; it contrasts the need to be both forward-looking and reflective. The same could be said about Aldrin’s estate planning.
Aldrin recently settled a lawsuit with two of his children and his former business manager. The complaint, filed in Florida state court, alleged that the defendants assumed access to Aldrin’s personal credit cards, bank accounts, trust money, space memorabilia and other property. It alleged that the defendants were self-dealing and that they established a de facto guardianship over Aldrin. The claims included breach of fiduciary duty, exploitation of the elderly, undue influence, conversion, conspiracy and others.
In response, Aldrin’s children sought to stay the action pending resolution of a separate incapacitation proceeding. They also asked the court to consider reports filed by an examining committee—which included a doctor, a nurse and a social worker—in the incapacitation proceeding. According to reports, Aldrin’s children claimed he suffers from Alzheimer’s-related dementia.
Separately, Morgan Stanley moved to intervene in Aldrin’s suit, alleging that they were the custodian of two accounts in the name of the Buzz Aldrin 2016 Trust. Morgan Stanley received competing claims: one from Aldrin claiming he revoked the trust and that all assets should be delivered to him and one from Aldrin’s son claiming he is the sole trustee of the trust and that Morgan Stanley should hold the assets, including a reasonable reserve for payment of trust expenses. Morgan Stanley’s motion asked the court to instruct it how to proceed.
Amid the foregoing frenzy, and on the eve of the 50th anniversary of the moon landing, Aldrin and his family agreed to settle their dispute. Aldrin’s lawsuit, however, raises all kinds of interesting trusts and estates questions, which become critically important both for avoiding litigation and for dealing with it when it arises.
First, the selection of a trustee. Is it better to include trusted individuals, family members, corporate trustees or some mix? Trusted individuals or family members may have the settlor’s complete confidence at the time the trust is created, but what happens if that changes? Individual and family relationships are far more susceptible to emotional and other extraneous factors. On the other hand, corporate trustees may provide a level of reliability, consistency and professionalism, but that comes at a cost and they might be less in tune with the settlor’s true purpose. Many professionals believe a mix between these groups strikes the right balance.
Second, how many trustees? If the settlor wants a single trusted individual or family member to have the primary say, she/he may not want to dilute that trustee’s power by appointing others. But again, what happens if that relationship changes? With the appointment of three or more trustees, a majority could likely outvote a single disgruntled trustee and perhaps reason would prevail. Even the appointment of two trustees could cause a stalemate and require court intervention before adverse actions are taken.
Third, what does the trust agreement say about incapacity? Here, Aldrin claimed he revoked the Buzz Aldrin 2016 Trust and that Morgan Stanley should return the assets to him. But the trust agreement attached to the filed complaint provides that Aldrin has the power to revoke the trust “except during any period of my incompetency.” Aldrin’s children claimed he was incapacitated and therefore unable to revoke the trust. That put Morgan Stanley in a tough spot; thus they smartly asked the court to provide instruction.
Had the parties not resolved their dispute, the method and manner of determining Aldrin’s capacity would have become critical. There is case law holding that a definition in the trust agreement controls, at least as to the revocability of the trust and other matters of administration. The Buzz Aldrin 2016 Trust provides that Aldrin shall be deemed incompetent upon the rendering of a written determination by two licensed physicians that he lacks the physical or mental capacity to completely manage his financial affairs or the financial affairs of the trust. If Aldrin’s children obtained such a determination before he attempted to revoke the trust, it would appear the revocation was ineffective. On the other hand, the trust agreement also provides that a person shall be deemed to have regained their competency upon the written determination of two licensed physicians.
Separately, Aldrin’s capacity would also have been addressed in the incapacitation proceedings. There, the court appoints a three-person examining committee, which must include one psychiatrist or other physician and can otherwise include anyone from licensed doctors to social workers to others the court deems qualified. The examining committee examines the alleged incapacitated person and provides a report with a diagnosis (if possible), an evaluation of the person’s ability to retain certain basic rights and a description of any incapacitation. A hearing is then held at which incapacitation must be proven by clear and convincing evidence. The alleged incapacitated person must be present at the hearing (absent good cause) and has the right to contest incapacity. The examining committee’s opinions are considered as evidence, but are not conclusive. Thus, the litigants often hire their own physicians and the “battle of the experts” can be long and expensive.
So what are key takeaways from Aldrin’s legal proceedings? First, be careful who you select as a trustee and consider utilizing both trusted individuals and corporate trustees. Second, think carefully about the number of trustees and consider the power that a single trustee may possess. Finally, pay special attention to the incapacitation definition in your documents. It can be used both as a sword and a shield, depending on who is wielding it. And if you’re concerned about any of these issues in your own life, the best advice we can give is to involve an experienced professional early.
Jason Domark, Charles C. Kline and Reid Kline are partners in the commercial litigation department at Cozen O’Connor in Miami.