Thursday, October 1, 2009

Estate Litigation: Martin Luther King Jr.'s Children Wrangle In Court Over Estate

Once estate or probate litigation happens, there are probably many silent prayers that there be a peaceful resolution. Litigation among family members is often very stressful, disruptive and sometimes emotionally painful.

It's not often, however, that such prayers become public. On September 29, 2009, the Rev. Joseph Lowery, a follower of the Rev. Martin Luther King Jr. invoked the spirit of the civil rights icon and his wife, Coretta, in praying for a peaceful resolution to the legal battle among the King children. He led dozens of clergy, civil rights veterans and others in prayer at the Kings’ crypt in Atlanta.

If the King family can have a family and legal dispute over the valuable estates of Martin Luther King Jr. and Coretta Scott King -- it shows that anyone can. It is apparent that the lawsuit is embarrassing to those who are intent on preserving Kings' legacy.

In July 2008, the lawsuit was filed in Fulton County, Georgia with two of the siblings claiming that a third has misappropriated money from their parents' estates. Bernice King and Martin Luther King III charge that in late June 2008, their brother Dexter improperly transferred "substantial funds" from Bank of America to accounts he controls. The Bank of America account contains funds from the estate of Coretta Scott King, who died in 2006 at age 78.

Bernice is administrator of her late mother's estate, while Dexter is president of the Estate of Martin Luther King Jr. corporation -- of which the siblings are all shareholders. The operation of that business is in disarray, with the siblings "deadlocked" in its management, according to the complaint, which charges that the company's assets are "being misapplied or wasted."

Lawsuits often result in cross-complaints and this was no exception. Dexter countersued, claiming that his siblings had improperly borrowed office space and company cars from the King Center, an Atlanta civil rights museum. He also accused Bernice of corrupting their father’s legacy by acting as host of an anti-gay-marriage rally at the center.

Recently, on September 14, 2009, Judge Ural Glanville ordered the children of the Rev. Martin Luther King Jr. to meet in their capacity as the sole shareholders of the corporation that manages their iconic father's estate. The three siblings have not held such a meeting since 2004. The removal of Dexter King as the estate's administrator was unlikely because that would require a meeting of the board of directors.

Judge Glanville also ruled in favor of dismissing some of the allegations against Dexter King, but left the question of whether he failed to act in the best interest of his father's incorporated estate to a jury. A trial on the allegation of breach of fiduciary duty could happen as early as next month.

Attorney Comments: First, like many estate lawsuits, this occurred after the death of the children's mother, Coretta Scott King, in 2006 and another sister Yolanda in 2007. The parent or older sibling is often the glue that is holding the family together and informally resolving disputes.

Second, the "breach of fiduciary duty" cause of action alleged against the brother Dexter King is a reminder to all estate trustees that they should appreciate the fiduciary nature of his or her position. The trustee may understand his or her concrete duties and responsibilities -- but when emotions are involved and family or beneficiary disputes arise, he or she may lose sight of their "fiduciary duty."

What is fiduciary duty? A fiduciary's duty requires honesty of course. In addition, it requires the trustee to have undivided and undiluted loyalty to those whose interests the fiduciary is to protect. Thus, the trustee must treat each beneficiary with loyalty and protect their interests. This becomes more complicated when the trustee is also a beneficiary. A trustee cannot favor his or her own interest over another beneficiary's interest. The trustee is not entitled to treat the property of the trust as if it were his or her own. The trustee is wearing two hats (trustee and beneficiary) and the trustee hat imposes fiduciary duties of loyalty to the other beneficiaries. The greatest exposure to litigation for a trustee arises from his or her fiduciary duties.

Not even the slightest hint of self-dealing or unfairness is acceptable in the relationship between a fiduciary and those whose interests he or she is to protect. It is sometimes difficult for a fiduciary to recognize a problem when it occurs and it can be more difficult to be truly objective. It is therefore important for trustees to carefully review their financial decisions with experienced counsel in order to insure that they are acting appropriately.

One advantage in using an attorney as counsel rather than an accountant or another professional is the protection provided by the attorney-client privilege. All communications between the trustee and his or her attorney will be privileged and not discoverable in the event of litigation. A communication with the CPA, however, where the trustee/beneficiary writes emails that he will never turn over the family house to another beneficiary without a fight could be discovered in future litigation.

In certain cases, for example, trustee's legal counsel may advise the trustee to obtain a release from the beneficiary or seek a court order before taking certain action. In other cases, the attorney may advise the trustee to immediately dispose of certain real property to a beneficiary so that the estate is no longer liable for that property (taxes, insurance, liability, etc.) and to minimize the risk that the beneficiary will have any future claim against the estate or the trustee.

Posted by Henry (Hank) J. Moravec, III, a partner at Moravecs, A Professional Law Corporation. For a free 30 minute consultation (telephonic or in person), you can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210.

He focuses his practice on Estate Planning, Trust and Probate Administration, Beneficiary and Trustee Representation, Tax Law, and Nonprofit Law. He represents clients throughout Southern California and his office is conveniently located for clients in the Los Angeles, Orange and San Bernardino Counties.

With respect to probate, Hank Moravec has over 20 years' experience as one of the best Los Angeles probate attorneys and Los Angeles probate litigation attorneys and is available should you need legal advice regarding your own or a family member's situation. For a consultation, You can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210 to request a consultation.

The firm website is http://www.moravecslaw.com/. The firm is located at 2233 Huntington Drive, Suite 17, San Marino, California 91108. There is ample free parking adjacent to the firm's office.

The office is located in San Marino, California, a suburb of Los Angeles in the San Gabriel area located 20 minutes from downtown Los Angeles. The firm represents clients throughout California and its attorneys appears in probate court throughout Southern California (Pasadena probate attorney, Los Angeles probate attorney, Santa Monica probate attorney, Pomona probate attorney, Torrance probate attorney, Long Beach probate attorney, Van Nuys probate attorney, Santa Barbara probate attorney, Orange County probate attorney, Riverside probate attorney, San Bernardino probate attorney)