As reported here by the New York Probate Litigation Blog, a New York jury found last month, in a mixed verdict, that Jonathan Blattmachr, one of the country’s leading trusts and estates lawyers, breached his fiduciary duty to a client in connection with a planning strategy called a “split-dollar insurance arrangement,” involving the purchase of life insurance to avoid estate taxes.
The following is an excerpt from Jury: Milbank’s Blattmachr Breached His Fiduciary Duty, as reported in the WSJ Law Blog:
Among the T&E bar, wrote New York Times tax reporter David Cay Johnston in his book “Perfectly Legal,” Blattmachr “enjoys the status of some Hollywood stars — his first name alone prompts recognition.” (We know Blattmachr’s a big macher, but can the name “Jonathan” alone really prompt recognition?)
But one of Blattmachr’s wealthy clients, Marvin Schein, was none too happy with Blattmachr’s services. Schein, whose father founded medical-supplies company Henry Schein Inc., sued Blattmachr and Milbank in 2003. Click here for the amended complaint, in which Schein alleged, among other things, that Blattmachr persuaded Schein to pursue a tax-avoidance strategy even though Blattmachr sensed IRS hostility toward it.
The strategy, called a “split-dollar insurance arrangement,” involved the purchase of life insurance to avoid estate taxes. In December 2000, Schein paid roughly $12 million in premiums for about $340 million in life-insurance policies. The IRS effectively halted the strategy in August 2002, a move Schein said rendered his policies useless.