If You Can Dream It, You Can Do It in Houston…Unless the Trustee Says No

Your plan is only as good as the people who implement it. When they aren’t competent, don’t pay attention to details, or decide to pursue their own interests, disaster can ensue. The latest case involves the Walt Disney estate.

"If you can dream it, you can do it." Walt Disney shared great inspiration with the world, and no doubt with his own family. But ever since Disney passed away in 1966, problems with his estate plan have continued to mount.

At issue is a trust he left for his grandchildren. The trust itself is fairly standard in that trust principal was to be distributed to the grandchildren in stages. For one grandchild, everything went according to plan. However, for the other two, problems have arisen.

Investing Daily, in an article entitled “Key Estate Planning Mistakes You Need to Avoid,” locates the problem with a clause in the trust that states the principal could be withheld if the grandchildren lacked the “maturity and financial ability to manage and utilize such funds in a prudent and responsible manner.” The article points out that this is a standard clause in many trusts. The problem is that disagreements have arisen between the trustees and the grandchildren. The trustees say the grandchildren have learning disabilities and are unable to manage money. In addition, the trustees contend that the grandchildren are overly influenced by a stepfather. However, the grandchildren believe the trustees just do not want to lose their income from managing the trust and that the grandchildren are being punished for refusing to keep any distributed money at one of the trustee's financial firms.

From the outside, it is impossible to know whether the trustees or the grandchildren are in the right. What we can say is that it appears that Walt Disney chose the wrong trustees. It is extremely important to choose a trustee who will be able to cooperate with your trust's beneficiaries. Whenever litigation occurs between trustees and beneficiaries, that may indicate that wrong choice has been made.

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Reference: Investing Daily (July 24, 2014) “Key Estate Planning Mistakes You Need to Avoid”