If you make your living in or around the world of trusts and estates, by now you’ve heard of the litigation that’s broken out over Jimmy Buffett’s estate. What I find most interesting about this case is that it’s not your standard inheritance dispute. As in, no one’s contesting the validity of the trust (at least not yet). What’s at issue is a critical — but often overlooked — aspect of anyone’s estate plan: who’s in charge after I die?
Jimmy Buffett died in 2023. In that same year Forbes proclaimed him a billionaire based on a fortune that included 28% of Margaritaville, an estimated $570 million earned from tours and recording, a $50 million music catalog, and $140 million in planes, homes and Berkshire Hathaway stock. And if Buffett’s post-death earnings are anything like those of other celebrities of his stature, his most lucrative years may yet be ahead of him (a phenomenon documented in Forbes’ annual ranking of the the world’s highest-paid dead celebrities).
Who’s in charge?
Against this backdrop a key element of Buffett’s estate plan should have been how to ensure his vast business empire is best managed or “controlled” for the benefit of his wife, children, and later generations. That didn’t happen. How do we know? Because Buffett’s estate is currently the subject of litigation in Florida and California over this very issue. As reported in Jimmy Buffett’s widow, finance manager file dueling lawsuits for control of $275M estate:
A war is raging over control of the multi-million-dollar estate left by the late “Margaritaville” crooner and Palm Beach resident Jimmy Buffett, according to a pair of competing lawsuits filed on opposite sides of the country. Jane Buffett, the singer-songwriter’s widow, and Richard Mozenter, Buffett’s longtime friend and financial adviser, are going head-to-head for control of the singer’s trust, which Jane Buffett in her suit said is worth $275 million. … Both accuse the other of mismanaging the trust and ask judges in each jurisdiction to remove the other person as a co-trustee, records show.
In the commercial world, parties routinely draft contracts (such as LLC operating agreements, partnership agreements, and joint venture agreements) including non-judicial mechanisms for resolving disputes over management control. These agreements provide simple, self-executing methods for the interested parties (in this case Buffett’s wife and children) to change who’s in charge without having to go to court to do it. Assuming Buffett’s wife and business manager are not the only two human beings on the planet uniquely qualified to administer his trust, there’s no reason why Buffett’s trust agreement couldn’t have included the same type of non-judicial dispute-resolution mechanism focused exclusively on the issue of control. Another option — which I favor — would have been to include a generally-applicable arbitration clause in the trust agreement.
Using statutory no-fault mechanisms to change trustees
Buffett’s trust names two co-trustees: his wife and his business manager. Wife is suing in California for business manager’s removal as trustee, and business manager is suing in Florida for wife’s removal as trustee. Both presumably claim to be working for the best interests of the beneficiaries of Buffett’s trust, which are his wife (life estate) and their children (remainder beneficiaries).
As I’ve previously reported, fortunately for Florida trust beneficiaries, as of 2007 we’ve adopted § 706(b)(4) of the Uniform Trust Code, which is the UTC’s “no fault” trustee removal provision. This UTC provision is incorporated into our trust code at F.S. 736.0706(2)(d), and it empowers a court to remove a trustee without cause if:
There has been a substantial change of circumstances or removal is requested by all of the qualified beneficiaries, the court finds that removal of the trustee best serves the interests of all of the beneficiaries and is not inconsistent with a material purpose of the trust, and a suitable cotrustee or successor trustee is available.
Although the UTC’s no-fault approach is a vast improvement over traditional trust law, it does impose one very significant hurdle: unanimous consent by all of the trust’s beneficiaries. As I’ve previously reported, this may be a lot harder than you’d expect. For example, in this case there appears to be conflict between Buffett’s wife and one of their children, which presumably will have to be ironed out prior to any unanimous agreement being reached on the trustee issue. As reported in the article quoted above:
The Buffetts’ three children are remainder beneficiaries of the trust, and Jane Buffett has tried to remove their eldest daughter, in opposition of Jimmy Buffett’s wishes, Mozenter claimed.
Why dueling lawsuits in California and Florida?
As reported in the article quoted above:
Mozenter’s petition was filed June 2 in Palm Beach County Circuit Court, and Buffett’s lawsuit was filed the next day in Los Angeles civil court, records show.
If you’re wondering why all of a sudden there’s a race to the courtroom door in California and Florida, so am I. My guess is that both sides have concluded there’s some advantage to litigating their claims in their respective chosen jurisdictions, but both assume a court in either state would have jurisdiction to decide the case.
So here’s the problem: what do you do when two courts in different states with equal jurisdictional authority are asked to adjudicate the same dispute? That’s what’s apparently happening in this case: two courts, one in California and the other in Florida, with equal jurisdictional authority are being asked to adjudicate the same trustee removal issue. Neither court has the authority to order the other to stand down, although both have the discretionary authority to stay their own proceedings as a matter of comity in favor of the foreign proceeding. How this kind of deadlock is resolved in Florida turns on the “principle of priority,” which I’ve previously reported on here. Under this doctrine, the court that first “exercises its jurisdiction” over the matter has priority (i.e., should be permitted to adjudicate the matter to conclusion), while the second court should stay or dismiss its proceedings pending a final adjudication of the first case, unless there are “special circumstances” justifying denial of a stay/dismissal of the second case. This would explain why both sides in the Buffett case filed mirror-image lawsuits on back-to-back days.
What’s the takeaway?
Uncertainty is unavoidable, the best we can do is manage it. And good estate planning is all about managing uncertainty. The trick is knowing which uncertainties or “risks” to focus on. A key risk factor in any estate plan, but especially for clients with estates as large and complex as Buffett’s, is “control.” Who is chosen to manage the estate, be it as trustee or in any other capacity, is just as important as tax planning or deciding who’s going to inherit your wealth. Unfortunately, this risk factor is often overlooked. That’s a mistake. Just ask the Buffett family.