March 2010

Demanding Accountability

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Anna Nicole Smith’s assault on American property rights

Lou Ann Anderson
By Lou Ann Anderson

Many recent articles describing the appeals court ruling against Anna Nicole Smith’s pursuit of the Marshall fortune treat the case as an entertainment story. In other quarters, legal scholars and pundits will dissect and comment on the 68-page court opinion analyzing the intricacies and technical aspects of the latest development in this 15-year legal saga. Missing from these case treatments is a practical, non-technical explanation of the impact that Marshall v. Marshall could have on American property rights, specifically dependence on instruments like wills or trusts to execute inter-generational transfers of assets.

This case is a cautionary tale of an attempted Involuntary Redistribution of Assets (IRA) action in which probate venues and/or probate instruments (wills, trusts, guardianships or powers of attorney) are used to literally loot assets of the dead, disabled or incapacitated. These type legal and financial assaults can (and do) happen to people at all economic levels.

Anna-Nicole Smith
Anna-Nicole Smith

It’s first important to understand the crux of the Marshall case. Anna Nicole Smith’s Texas litigation was based on an unsubstantiated claim that her husband, J. Howard Marshall II, verbally promised to leave her half of his assets valued by some up to $1.6 billion. Marshall had spent several million dollars on Smith in the three years prior to their marriage and another $6.7 million during their 14-month marriage. The alleged oral commitment was not reflected in six wills and seven other estate planning documents filed in courthouses throughout Texas by Marshall, a man intent on his estate distribution wishes being available and well-documented for proper execution. His circle of family, friends and employees understood that Marshall was providing generously for Smith during his lifetime in lieu of making her an estate beneficiary.

Nonetheless, with Marshall’s 1995 death, Smith embarked upon a series of legal actions designed to extract financial resources from the Marshall family. E. Pierce Marshall, J. Howard Marshall II’s son and heir, became Smith’s target. A jury trial in a Houston probate court spanned from September 2000 through March 2001 and facilitated the most thorough examination of Smith’s claim. During the course of that trial, Smith also filed for bankruptcy in Los Angeles citing in court filings how her husband promised her a share of his estate - again, unsubstantiated.

As the Texas trial to determine if Smith had any legitimate claim to Marshall’s estate continued, the California bankruptcy court exercised minimal scrutiny and awarded Smith $474 million from the estate. Meanwhile in March 2001, the Texas jury unanimously upheld that J. Howard Marshall intended to leave his estate to his son, not Smith. The California judgment, however, even after being reduced to $88 million in 2002, provided another front from which Smith and her legal team could further continue pursuit of the Marshall estate.

Pierce Marshall, J. Howard Marshall’s legitimate, designated heir, defended his father’s estate plan through a series of appeals and ultimately in May 2006, before the U.S. Supreme Court which ruled that federal jurisdiction of the case was proper and remanded the case back to the 9th Circuit Court of Appeals for review of remaining issues. In June 2006, Pierce Marshall died. Smith died in February 2007. With Smith’s ex-boyfriend Larry Birkhead and attorney Howard K. Stern executors of her estate, the assault on the Marshall estate continued with Pierce Marshall’s widow as a new target.

Now, nearly four years later, the 9th Circuit has issued its opinion and a statement from the Marshall family accurately describes the ruling as having “vindicated the efforts of the late E. Pierce Marshall to uphold his father’s estate plan.” Kent Richland, a Smith estate attorney, is making rumblings about a possible appeal. Time will tell. One might think that estate executor Howard K. Stern would be focused on his own upcoming trial on charges of conspiring to provide prescription drugs to Smith prior to her death. Whatever happens in the future, past events can be laid out quite clearly and the picture that emerges is one of legal and financial assault on a family by individuals who appear to be nothing short of modern-day grave robbers.

To recap. Anna Nicole Smith derived great financial benefit from her relationship with J. Howard Marshall II. People close to him were aware he was providing for Smith during his lifetime, not upon death. Smith’s claims that Marshall intended half his estate for her were never substantiated and in fact, they were contradicted by Marshall’s elaborate estate planning instruments. The Houston jury spent seven months hearing testimony and evaluating evidence. They did not find Smith or her claim credible. Venue shopping in the form of the California bankruptcy action allowed Smith’s legal team to keep their estate extraction efforts alive. Despite being supported by a Harris County probate court, the court with legitimate jurisdiction, the Marshall family was subjected to many more years years of defending a responsibly-prepared estate plan.

The idea that an unsubstantiated oral claim of inheritance rights and the prospect of venue shopping to keep erroneous claims alive are the two major threats Anna Nicole Smith’s quest could thrust into the lives of ordinary, hard-working people. Success on the part of her legal team would put at risk all Americans who prepare an estate plan and presume their desired distribution of assets will be respected.

A common sense, practical view of this case says Smith and her attorneys knew that making this claim against Pierce Marshall could be lucrative. When these cases get going, reality becomes unimportant and the truth takes a back seat to the legal gamesmanship. These 15 years of litigation have been about nothing more than attempting to use an unsubstantiated claim and the legal system to extort assets received via a legitimate inheritance. It’s that simple, it’s that ugly and it happens every day.

Involuntary Redistribution of Assets (IRA) practitioners target estates of all sizes and many people don’t have the financial means or general wherewithal to even fight such an action. As this point is never lost on prospective asset looters, people must become vigilant. Those who initiate or participate in IRA actions are heinous people compromised both in their ethics and morals. Their behavior is in no way excusable, but it should be studied so as to understand with what you are dealing - that their creation of an uneven or chaotic playing field is far more important than any legitimate case merits. Pierce Marshall learned this, as have many other IRA targets.

Despite significant resources, the Marshall family has endured a seemingly never ending legal and financial assault. This gives pause for concern as new IRA cases seem to surface almost daily. Many people’s economic welfare has already been harmed due to current economic turmoil and ever-increasing taxation. Now, estate assets once thought to be yours or your prospective heirs may not stay that way due to speculative efforts of disgruntled family members or others perceiving some “entitlement.”

No inoculation for Involuntary Redistribution of Assets currently exists, but efforts to expose this problem and educate the public are underway. Meanwhile, forewarned is forearmed.

More Articles by Lou Ann Anderson

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