A Feud is Brewing Over Dianne Feinstein’s Husband’s Estate
July 28, 2023 – Media MentionPrivate Client Services Partner Marc M. Stern was quoted in WealthManagement.com discussing the feud that is escalating over the estate of Dianne Feinstein's late husband, Richard Blum.
Excerpts:
“While Feinstein’s request on its face may be justified under the terms of the trust, it should probably be denied by neutral trustees on the basis that Feinstein has sufficient assets and doesn’t need it,” opined Marc M. Stern, partner at Greenberg Glusker in Los Angeles.
It can’t be reiterated enough the importance of having conversations about who gets what while a client is still alive. “Clear and unambiguous directions in the testator/settlor’s estate planning documents can also help avoid disputes,” said Stern. “However, clear directions can also breed their own disputes when the expected circumstances don’t materialize and there’s no flexibility to deal with unanticipated events.” In this situation, for example, perhaps some of the tension could have been avoided if Richard stipulated for the sale of the property and distribution of the proceeds in equal shares rather than leaving it as a trust asset.
One solution to settle a dispute of this nature, according to Stern, is to convert the income interest in the trust for the surviving spouse to a unitrust under California law (Probate Code Section 16336.4). “Whereas under a ‘traditional’ trust there are competing desires for income and principal growth, a unitrust aligns the interests of the income and remainder beneficiaries. Under a unitrust, income is measured as a fixed percentage of the trust’s assets revalued annually,” explained Stern.
“By using a unitrust, both the income beneficiary and the remainder beneficiary have the same goal: to maximize the trust’s total return, regardless of whether that return would traditionally be considered income or principal. Maximizing the value of the trust not only generates more income for the unitrust income beneficiary but also maximizes the principal value for the remainder beneficiary,” he added.