Tuesday, May 29, 2007
Court Rejects Challenge to Billionaire Philanthropist’s Estate Plan
By a MetNews Staff Writer
The ex-wife and children of a much-married and wealthy patron of the arts cannot seek to enforce provisions of a divorce judgment against his estate without risking the loss of trust provisions that he made for their benefit, the Court of Appeal for this district ruled Friday.
Div. One, in an opinion by Justice Miriam Vogel, sided with trustees appointed by the late Richard D. Colburn. The businessman, who made a fortune in construction-related businesses and endowed the Colburn School of the Performing Arts in downtown Los Angeles, died in 2004 at the age of 92.
Colburn had, two years earlier, divorced Jacqueline Colburn, who was reportedly the ninth of his 10 wives. They had two children, a daughter born in 1998 and a son born in 2000.
The contentious divorce—Jacqueline Colburn reportedly hired Anthony Pellicano, and is supposedly a key government witness in the government’s investigation of the controversial detective—ended in a multimillion dollar settlement.
Richard Colburn agreed to pay $4,000 per month in child support, continuing after his death; to pay for the children’s medical and dental care; to pay non-modifiable spousal support of $8,333 per month, also to continue after his death; to put $950,000 into an irrevocable trust for the children’s benefit; and to create an irrevocable trust or annuity that would pay Jacqueline Colburn $100,000 per year for the rest of her life.
He also agreed to pay her $750,000 to equalize their division of community property and $750,000 in child support so that she could purchase a residence for herself and the children.
He then amended the terms of a trust he had established in 1969 to provide that after his death, the trustees would use the proceeds to make the spousal support, child support and medical expense payments agreed to in the divorce settlement, and to create separate $3 million trusts for each of the children.
The amended trust instrument contains a no-contest clause specifically disinheriting “any person, who is or claims under or through a beneficiary of this trust, in any manner whatsoever, directly or indirectly, contests or attacks this trust or my Will, takes any action that would frustrate the dispositive plan contemplated in this trust or my Will, conspires or cooperates with anyone attempting to contest, attack, or frustrate this trust or my Will” or takes any of a number of specified actions.
In the event of such action, the document provides, that person’s share would go to a charitable remainder trust.
The instrument further provides that Jacqueline Colburn “and all of her descendants,” including their two children, would be specifically disinherited if she brings any claim, including a creditor’s claim, against his estate, the trust, or his charitable foundations.
He appointed the National Trust Company and three of his six adult children as trustees.
Jacqueline Colburn then brought two “safe harbor” petitions seeking a judicial determination as to whether she could bring a creditor’s claim—seeking $8.55 million for herself and $4.687 million for the children—or an order to show cause for modification of child support without violating the no-contest clause. She contended that the trust provisions would not fully satisfy the obligations imposed by the marital settlement agreement.
Los Angeles Superior Court Judge Aviva K. Bobb ruled that a creditor’s claim would violate the no-contest clause but that an OSC re: modification of child support would not, as a matter of public policy.
Both sides appealed, and the panel Friday ruled for the trustees on both issues.
Vogel explained that Colburn had the right to impose a “forced election” requiring his ex-wife to choose, on behalf of herself and the children, between receiving the benefits of the marital settlement agreement or the benefits provided for in the trust instrument.
Colburn’s intent was clear, the justice said.
“By its substantive provisions, the trust itself confirms Richard’s intent to have the trust perform all of his obligations under the marital judgment — while at the same time giving $3 million gifts to each of his children,” Vogel wrote. “Quite plainly, he did everything within his power to ensure that Jacqueline and the children would accept his gifts without challenging his overall testamentary plan, while at the same time forcing their election so that their challenge to the trust, if made, would leave them to their remedies under the marital dissolution judgment.”
The justice concluded that the public policy supporting enforcement of support orders would not be violated by enforcing Colburn’s wishes. Jacqueline Colburn remains free to enforce the marital judgment, Vogel explained, or take under the trust, but it would be unfair to allow her to accept the terms of the trust “to the extent it confers a benefit, and at the same time attack the instrument to the extent it does not.”
The justice added that it is premature to consider what the result would be if Jacqueline Colburn elects to pursue a creditor’s claim but her children, represented by a guardian ad litem, elect to take under the trust.
Attorneys on appeal were Paul F. Cohen and Liza Amtmanis of the Law Offices of Paul F. Cohen, along with Gordon B. Cutller, for Jacqueline Colburn; Allan B. Cutrow and Karl de Costa of Mitchell Silberberg & Knupp for the children; and Stuart P. Tobisman, David C. Nelson and Alyse N. Pelavin of Loeb & Loeb for the trustees.
The case is Colburn v. Northern Trust Company, 07 S.O.S. 2786.
Copyright 2007, Metropolitan News Company