Will Dianne Feinstein’s Legal Drama Continue Following Her Death?
TOM WILLIAMS/AFP/Getty Images Wealth Planning>Estate Planning Will Dianne Feinstein’s Legal Drama Continue Following Her Death? The multiple active lawsuits involving the senator's late husband's estate will likely be paused while her own estate is probated. U.S. Dianne Feinstein passed away last week at the age of 90. Wealthy in her own right, Feinstein’s net worth sky-rocketed after her marriage to billionaire late husband Richard Blum, a prominent investor and founder of Blum Capital Partners.
She is said to have some $70 million in cash, along with the vast real estate portfolio left behind by Blum in a marital trust, boasting properties in the most exclusive locales nationwide, including a $21 million mansion in the heart of San Francisco. Her $7.1 million Washington, D.C. mansion wasn’t part of the marital trust and will likely pass to her daughter, Katherine. However, the rest of the properties in the marital trust portfolio, among any other joint assets, will likely be split equally among Katherine and Blum’s three daughters from a prior marriage, Annette Blum, Heidi Blum Riley and Eileen Blum Bourgarde.
It remains to be seen whether the probate of Sen. Feinstein’s estate will go over smoothly. Katherine, through a power of attorney, was already in a heated battle with Blum’s daughters over one of the properties, a Stinson beach home in California, while Sen. Feinstein was still alive, along with two other lawsuits she filed against the trustees of the marital trust over other matters—including accusations of elder abuse, failure to fund the marital trust and failure to reimburse the Senator for her medical expenses.
Future of Outstanding Lawsuits
This leaves many wondering what will happen to the outstanding lawsuits against Blum’s estate now that Feinstein has died. According to David A. Handler, partner at Kirkland & Ellis, LLP in Chicago, “The lawsuit could continue, with Sen. Feinstein’s heirs claiming the trustees should have made distributions to the senator or paid for certain expenses, which would have left more of her own money to pass to them.” For example, although ongoing medical expense claims would be moot because of her death, the past incurred expenses are still at issue.
The lawsuit might be put on pause temporarily while Feinstein’s estate goes through probate, however, Katherine should be able to maintain her claims (possibly in a new role as executor of her late mother’s estate).
Last month, a San Francisco Superior Court judge ordered Feinstein and the trustees in the suit over Blum’s assets to private mediation. The parties were said to have welcomed negotiations, but there were indications that reaching a resolution wouldn’t be simple.
Planning for Blended Families
Typically, families with wealth of this magnitude prefer to settle any disputes behind closed doors, so it’s a bit unexpected to have such a high-profile estate battle play out publicly in court.
When blended families are involved, such as in this case, careful planning is necessary to prevent the disputes in the first place. “Whenever possible, keep assets and inheritances separate. For example, avoid leaving assets in trust for a surviving spouse where the assets remaining at his/her death pass to children of the first spouse’s prior marriage,” said Handler.
Otherwise, he explains, you end up with this exact situation: “the ‘other’ children looking over the shoulder of the trustees, wanting to preserve more assets for themselves, and the surviving spouse wanting more money for expenses and lifestyle. Ideally, either leave assets outright to the spouse or to a trust where the remainder goes to the spouse’s own children, and leave other assets to the children of the first marriage.”
Handler also suggests life insurance as a useful tool to “create” a pool of wealth at death for one of the groups of beneficiaries. He also reiterated the importance of being as clear as possible regarding the terms/rules of distributions.
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Originally posted on: https://www.wealthmanagement.com/estate-planning/will-dianne-feinstein-s-legal-drama-continue-following-her-death