The Estate of Leona Helmsley
Before her death on August 20, 2007, billionaire hotelier Leona Helmsley established a charitable trust for “the benefit of dogs,” which was funded with more than $4 billion.
She also established a trust for the benefit of her Maltese, Trouble. Upon her death, Trouble’s trust was funded with $12 million. Her brother received $15 million and two of her four grandchildren received $10 million, while the remaining 2 grandchildren were left out of the Will entirely. She also left $100,000 to her chauffeur.
Predictably, the omitted grandchildren initiated a contest, and were able to successfully convince the judge to reduce the trust from $12 million to $2 million even though New York law does not provide inheritance rights to an omitted grandchild and the decedent’s intent typically should prevail. To make matters worse, the result was especially unfortunate for Trouble as his annual care costs included: $100,000 for full-time security, $8,000 for grooming, $1,200 for food and $60,000 for the guardian fee. The $10 million reduction was divided, with $6 million going to the grandchildren and $4 million going to the $4 billion charitable dog trust.
Although it was Leona’s intent to provide a charitable trust for the benefit of dogs, the court found that the separate mission statement to the trust – drafted by Leona and not incorporated into her Will or trust – included very broad discretionary distribution language; Leona had been warned that the mission statement may not be legally binding. As a result of Leona’s personally drafted statement, the court determined that the distribution language of the trust allowed the trustees to distribute trust funds for such charitable purposes and in such amounts as they may, in their sole discretion, determine. So far, distributions from the trust have been made to charities in the areas of health care, medical research, education and human services; however, distributions have not included charities such as the SPCA or The Humane Society.
While these generous charitable distributions from the “dog trust’ will fund important research, the true intent of Leona Helmsley (whether or not some find her intent questionable) was not upheld. Each person has the right to dispose of her property in accordance with her wishes – so, what went wrong in this case? The result was caused by poor drafting on the part of Leona. When properly drafted, charitable trusts (and pet trusts) are enforced by the courts. Instead of being distributed in accordance with her wishes, a vast portion of her estate was given to various organizations without her knowledge or consent. Even deliberately disinherited family members received a share of her fortune merely because they were related to the decedent. If she wanted to disinherit two grandchildren, provide her wealth to animal charities and establish a valid pet trust, she should have sought the appropriate legal advice.