Recently I was given a copy of The Collector’s Handbook by James L. Halperin and Gregory J. Rohan, in which they state, “With careful preparation, the collection you have worked so hard to build can provide for those your care about . . . and serve them as a blessing and not a burden.”
The idea that disposing of your collection, or for that matter a family business, real estate or other significant asset, invariably converts a burden into a blessing for the family could not be further from the truth.
It is a myth fueled by lurid stories of elderly widows, ignorant children and unsophisticated non-profits being bilked by unscrupulous heirs, deceitful dealers and self-serving brokers. Purported experts and the media further perpetuate the myth by detailing the satisfaction felt by some owners, and their heirs, who sell significant assets for large sums of money at the owner’s death. The implication is that those who retain ownership must feel a sense of disappointment.
However, that scenario misunderstands the source of the potential burden posed by a collection or other significant asset. It is not the ownership of the asset in itself that presents a potential hardship for the owner’s family. Rather, the difficulty is in properly managing the shift of ownership and control from one generation to the next.
The personalities, capital, experts, skills, experience and abilities need to be brought together in an ongoing, flexible process to support the family and protect the ownership of the significant asset or assets. Here are two examples that illustrate the point:
As wife of the late Vincent Astor, Brooke Astor was “the most popular woman in New York,” taking on her deceased husband’s real estate and philanthropic endeavors with enthusiasm. She was also a collector, had inherited fine art from her husband and owned some of the most stunning real estate in Maine and New York. She certainly had access to the outside expertise and capital to organize, administer, plan and dispose of her assets in a way that would be a blessing and not a burden on her family.
On July 26, 2006, the New York Daily News ran a front-page story on the family feud between Astor’s son, Anthony Dryden Marshall, and her grandson Philip Cryan Marshall, regarding the welfare of the aging Ms. Astor, then 104 years old. The article detailed how Astor’s grandson, an historical preservationist and associate professor at Roger Williams University, had filed a lawsuit seeking the removal of his father as the socialite’s guardian and the appointment of Annette de la Renta, wife of designer Oscar de la Renta, in his stead.
According to accounts published in The New York Times and the New York Daily News, Astor was diagnosed with Alzheimer’s Disease and suffered from anemia, among other ailments. The lawsuit alleged that Marshall had not provided for his elderly mother and instead had allowed her to live in squalor and cut back on necessary medication and doctor’s visits, all while enriching himself with income from her estate. Philip Marshall further charged that his father sold his grandmother’s favorite Childe Hassam painting in 2002 without her knowledge, and could not produce a record as to the whereabouts of the funds received from the sale. In addition to Annette de la Renta, Henry Kissinger and David Rockefeller provided affidavits supporting Philip Marshall’s requests for a change in guardianship.
The claims made by Philip Marshall regarding his father’s mishandling of the estate prompted interest in the matter. On November 27, 2007, indictments on criminal charges were announced against Astor’s son, Anthony D. Marshall, and attorney Francis X. Morrissey Jr. The charges stemmed from the district attorney’s office as well as the subsequent grand jury investigation into the mishandling of Astor’s money and a questionable signature on the third amendment to her 2002 will, made in March 2004. That amendment called for Astor’s real estate to be sold and the proceeds added to her residuary estate. An earlier amendment, also made in 2004, designated Marshall as the executor of his mother’s estate and left him the entirety of the residuary estate, was also under investigation.
On October 8, 2009, the jury convicted Anthony D. Marshall on 14 out of 16 counts including one of two charges of grand larceny, the most serious among a number of charges brought against him. The grand larceny conviction carries a mandatory prison sentence, meaning that Marshall could have been sentenced to spend between 1 and 25 years in prison. Marshall was given 1-3 years but spent only two months in prison before being released on medical parole due to his failing health. He died on December 2, 2014. Francis X. Morrissey Jr. was convicted of forgery. Philip C. Marshall, grandson of Ms. Astor, acknowledged that since his father had been convicted, he expects the will to be contested by various charities.
No one really thought through the personalities, expertise, skills, interests, or abilities of the family nor the disposition of the assets. By neglecting to develop scenarios that could foresee this undesirable future there was simply no way to take steps to avoid it until it was too late.
John Kittredge was a well-known collector of coins and currency. He lived in Worcester, Massachusetts, and contributed greatly to the New England numismatic community. His family owned a small cemetery monument business that serviced Worcester county. Through his community ties, John became acquainted with Attorney Matthew Erskine, who represented the Kittredge family in a variety of legal endeavors. In the early 1990s, John suffered a debilitating stroke, leaving him paralyzed on his right side. He wrapped up his business affairs as he was no longer able to work. His sister retired from her job and moved in with him to help him and manage his care.
During this time John continued to collect and be active in local and regional numismatic clubs, but never disclosed the scope or extent of his collection or financial affairs to anyone. Erskine, aware that John’s estate would involve some type of coin collection, began tracking the various trends in how such collections are handled from tax, philanthropic, financial, and management perspectives. Based on these trends Erskine developed appropriate responses to various scenarios in order to ensure that the estate was prepared if a crisis occurred.
In early in 2006, John was hospitalized with congestive heart failure and his prognosis was poor. His sister Margaret contacted his attorney to find out what arrangements had been made for his assets. Upon learning that John had arranged for all of his assets to pass to her, Margaret became concerned about his coin collection. As the crisis of John’s illness was unfolding, she very much wanted to ensure the preservation of her brother’s coin collection. Margaret knew the importance of this to John, as he had never sold any coins during all of his time as a collector. John only added to his collection.
At the time he was hospitalized, John was quite ill and unable to sign new documents. Fortunately, by developing a response outline for this precise scenario, the attorneys at Erskine & Erskine made sure that his existing estate documents provided the flexibility necessary to create and execute a plan that would hold his collection, keeping it intact. This would ultimately lead to the creation of the Kittredge Numismatic Foundation, and provide for Margaret’s financial security. This accomplished two important goals. It fulfilled John’s wishes to preserve his lifetime passion, and it provided for the final security of his sister through a trust and family office account for her benefit.
Following John’s death, Erskine & Erskine accompanied Margaret to open the safety deposit boxes where John kept his coins. To the surprise of all involved, they discovered that John maintained 15 large boxes containing over 7,200 individual coins and weighing in at about half a ton. Nobody, not even Margaret, had envisioned that his collection was so extensive. The attorneys assisted with the task of cataloging the coins for the estate tax return and helped put all of John’s remaining financial affairs in order.
Following her brother’s death, Margaret wanted to travel to Europe. The attorneys at Erskine & Erskine were ready to help her locate a suitable travel companion and arrange for the trip, as well as prepare contingency plans for any issues that might arise. This precaution proved prescient.
Margaret fell at the airport while traveling. Upon arriving home, she was accompanied to the hospital by her attorneys, who then arranged for appropriate medical care. Following that incident, Erskine & Erskine developed several scenarios as to how she could return to her home safely, and, with her assent, went forward with modifications to her residence. This included painting, installation of air conditioning, and placement of railings along walkways. The attorneys also engaged home health aides to temporarily care for her as she transitioned back to independent living.
Traditional estate planning would likely have treated this entire situation with a singular focus: achieving financial security for Margaret. John’s existing and basic estate planning documents that were in place provided for his sister’s financial security by allowing for the disposition, i.e. sale of his collection upon his death. However, through a creative, integrated, relationship-based approach, the attorneys involved were able to provide for Margaret’s well being while also preserving the collection in a way meaningful to John and his legacy.
Preparing solely for the disposition of a collection, family business, real estate portfolio or other significant assets only exchanges one burden for another. It does not necessarily provide for the family. Planning for the process of paradigm shift in ownership of a significant asset and allowing for the role personalities play in that shift provides the flexibility to cope with crises. In other words, who would you want to be at the end of your life: Brooke Astor or Margaret Kittredge?