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It is very hard being rich in America. Because of very onerous taxes payable on inheritance in that country, dying can be very bad for your financial health.
To cope with the strain, trust arrangements for the next generation are frequently deployed years, or even decades, before the grim reaper comes to collect his dues, usually just before the tax man too who may be close behind.
For the really rich however there are some downsides of these kinds of trust arrangements as, because they are known in advance, it allows the future heirs to argue over the spoils, and sometimes even go to court over it, even before their benefactor, whether parent or other close relative, actually does the decent thing and dies.
Often the heirs will quarrel with each other, and sometimes someone who is going to be left out may join in as well. Whole families have been known to split apart over the passions raised. However, it can also happen that the argument is with the one giving the money away, even while they are alive, absurd as this seems to sound – can’t someone do what he or she wants with his/her own money? Is complaining about it likely to endear you and your cause further, if there has been some personal estrangement leading up to it?
Well, in such a case the argument usually ends up revolving over whether the donor of the bequests is of sound mind when he or she is making them. when they are still alive this is at least, in principle, easier to determine than afterwards.
Just last week we have a very good example of this kind of problem, in the case of the estate of the late Robert Cohen, the founder of New Jersey based news retailer Hudson News, the retail part of which was sold in 2008 for US$805 million. His son James who was, and still is, running Hudson, which is now primarily a wholesale business, has been the main beneficiary of his father’s estate, and of gift of the business while still alive too, apparently.
Robert Cohen’s other child, his daughter Claudia married, and later divorced, billionaire financier Ronald Perelman. When she later died after a long struggle with cancer, Perleman became her executor on behalf of Samantha, the daughter they had together.
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Perelman immediately sued Robert Cohen himself, while Cohen was still alive, for reducing Samantha’s inheritance compared to her brother James – claiming Claudia had orally been promised half the Hudson News business. And since Robert’s death in 2012 his daughter Samantha has been suing James as well with him as her advisor, as her mother’s executor.
Ronald Perelman is nothing if not litigious, including even at one time suing his own father Raymond, and his younger brother Jeffrey as well, for fraud and breach of contract at one stage in his life, so this behaviour surprised nobody.
His case against Robert Cohen took so long to go through the courts however, racking up millions of dollars in legal costs along the way, that it has only just been adjudicated by the New Jersey Supreme Court. Last week the court have decided, finally, not to even hear Perelman’s appeal against earlier judgments against him in state courts and in favour of, at this point, the Robert Cohen estate since Robert Cohen unobligingly passed from the scene.
The court ruled that Robert Cohen was essentially of perfectly sound mind when he made the decisions that he made concerning his bequests, even though physically he was obviously in very frail health. The court also found that the Perelman suit was, essentially, frivolous as well though in the end no sanctions, which had been promulgated by a lower court at one point, were imposed.
As a result of the New Jersey Supreme Court decision last week, this part of Perelman’s suit can go no further. However his daughter Samantha is still suing her uncle, i.e. Claudia’s brother James, essentially over the same issues, claiming that James Cohen unduly influenced the ailing Robert Cohen into cutting her out of his inheritance. She also claims that his father was tricked by him into transferring most of the Hudson News business to him through manipulation of an ageing parent.
James Cohen’s own lawyers obviously take the position that it had always been the plan for his son to get the business. They have consistently argued that Robert Cohen, despite his illness and old age, was a strong-willed individual who clearly knew his own mind.
This case is still before the courts, though it is hard to imagine Perelman’s prospects have improved with the decision in the first case just handed down.
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