You know a trust has the potential to run off the rails when the beneficiary refers to the trustees as "The Three Musketeers".
After his untimely death in 2003, Dr. Robert Atkins’ widow sold his business netting proceeds of some $420 million. In his will, the famous diet guru set up two trusts: (i) a spousal trust that would benefit his wife, holding 90% of his assets, and (ii) a research foundation which would get the remaining 10%.
Cue the sword clanging of the three musketeers: a self-described entrepreneur, an accountant, and a lawyer, who befriended Ms. Atkins and became the widow’s closest advisors as well as trustees for the spousal trust (replacing the two trustees who had been appointed by Dr. Atkins). It is reported that Ms. Atkins subsequently agreed to pay each of them $1.2 million per year (excluding bonuses), signed them to 10-yr contracts, and allowed each of them to take out a $5 million life insurance policy on her life, naming themselves as beneficiaries.
Fast forward to a Wall Street Journal online report that a lawsuit had been filed by the Musketeers accusing Ms. Atkins of improperly firing them. Ms. Atkins and her new spouse asked for the trio to be removed as her trustees and further sought reimbursement of some of their fees. The relationship between the Musketeers and Ms. Atkins began to disintegrate in 2006 when Ms. Atkins met her new spouse to be, who himself then became increasingly involved in her finances. When the Musketeers balked at her new spouse’s demands to encroach for an additional $100 million for Ms. Atkins (above and beyond her $15 million annual income), he started making noise about having them removed as trustees.
That’s a lot of bread.
Have a great weekend,