How Marshall v. Marshall Affects
the Baby Boomer Generation
By Horace Cooper
Three years after her death, 'Anna Nicole Smith case' presents legal and financial risks for all Americans.
The Baby Boomers are a unique generation and need to be cognizant of inheritance-related laws and the implications of these laws as they are dealing with their own estate plans and the distribution of their life-long assets and accomplishments.
One of the most well known estate related cases is Marshall v. Marshall (a/k/a Anna Nicole Smith case).
J. Howard Marshall II had meticulously prepared his estate plan. However, due to an unprecedented legal attack by his wife’s, Vickie Lynn Marshall (a/k/a Anna Nicole Smith), legal team, the estate plan was nearly controverted.
Her legal team was able to challenge J. Howard Marshall’s written estate plan and took the case all the way to the Supreme Court where it is now under review by the 9th Circuit Court of Appeals on remand from the U.S. Supreme Court since May 2006.
• There are many lessons to be learned from the Anna Nicole Smith estate litigation. However, lack of preparation is not among them. As someone who has studied this case extensively, I must take exception to several characterizations made about the Smith - Marshall case.
• First, J. Howard Marshall II had meticulously prepared his will and estate plan. He hired multiple layers of attorneys from several law firms to assist him in the process, over a period of 17 years.
• Both his will and living trust were updated several times before his death, including during the period before and after his marriage to Anna Nicole Smith.
• It is also interesting to note that Marshall made his living trust, containing the bulk of his property, irrevocable after his marriage to Smith.
A probate jury actually got to examine all of the claims put forward both by Anna Nicole Smith and Marshall's other son, J. Howard Marshall III, during an extensive five month trial. The jury ruled against all of their claims as the truth was painfully obvious -- J. Howard Marshall II never intended to leave anything from his estate to Smith.
In my view, the only reason this case has continued to be litigated and the reason it fascinates me is that it represents a bold and audacious collateral attack on an estate outside of probate court. This attack has only been partially successful as the litigation continues, but if this attack ultimately succeeds there can be no such thing as estate preparation because one can contemplate all manner of other innovative attacks on a state through the use of specialty courts like the U.S. Tax Court, the Court of Special Claims, etc.
Estate planning has never contemplated planning to prevent jurisdiction in either these federal specialty courts or the federal bankruptcy court.
• The Marshall v. Marshall case has implications for everyone, not just the wealthy.. If the 9th Circuit Court of Appeals rules in favor of Smith’s estate a very dangerous legal precedent could be set for all. It would mean that almost any estate plan could be overruled despite the most careful planning.
• There are several legal cases that could impact the Baby Boomer generation and probate matters. The Marshall v. Marshall case, one of the most popular estate battles in history and the only probate case the U.S. Supreme Court has heard in the past twenty years, has the potential to set a significant and/or dangerous precedent on estate management and wealth distribution if J. Howard Marshall II’s estate plan is not upheld.
• The record in this case is replete with evidence that J. Howard Marshall II had never intended to include Smith in his will and estate plan. A jury trial in Texas heard extensive evidence over a nearly six month period. At its conclusion it ruled against Smith on every count and specifically upheld J. Howard Marshall II’s will and estate plan.
• Cases like Marshall v. Marshall, illustrates litigation abuse that will inflict an enormous burden on the inheritance plans of baby boomers. They and their beneficiaries are taxed directly and indirectly. Those who are sued directly are forced to pay for attorneys who ultimately recommend that they settle as a way to avoid further legal fees and the risk of an overwhelming jury award. Ironically, a larger portion of these verdicts go to the attorneys rather than to the alleged victims.
Estate Planning Tips
No matter your net worth, it's important to have a basic estate plan in place. Such a plan ensures that your family and financial goals are met after you die. Without a will, your assets that don’t pass automatically will be subject to higher administration costs and taxes. It also leaves the door open for your heirs to fight over your estate. Lastly, state law will dictate exactly where your money will go, and this may not reflect your wishes. If you have property in more than one state, estate planning is even more important. Administration costs will be higher without proper planning.
Your assets include your investments, retirement savings, insurance policies, and real estate or business interests. Ask yourself three questions: Whom do you want to inherit your assets? Whom do you want handling your financial affairs if you're ever incapacitated? Whom do you want making medical decisions for you if you become unable to make them for yourself?
If you have a tax planning estate plan, be aware of whether there is a state, estate/inheritance tax. Many tax planning Wills assume no state estate tax. The result can be state estate tax paid at the death of the first spouse. Many states are implementing estate or inheritance taxes.
A New Inheritance Tax for Baby Boomers by Horace Cooper
"She's No Million Dollar Baby": Read Cooper's original, accessible analysis of the Smith case which shut down a website with media traffic: find out why lawyers say Dannielynn won't inherit a dime.
A New Tax On Baby Boomers: Cooper shows how the Anna Nicole Smith case will cost ordinary Americans their right to choose their heirs.
Horace Cooper is a writer and legal commentator.
He is a Senior Fellow with the Institute for Liberty. From June 2005 - June 2007 he was a visiting assistant professor of law at George Mason University School of Law. While at GMUSL his research focus was on U.S. intellectual property rights policy, the role of the United States Supreme Court in the American constitutional system, political forecasting, the legislative process and federal labor law. Mr. Cooper has served in senior capacities in the George W. Bush Administration including stints as chief of staff at the Voice of America and the Dept of Labor’s Employment Standards Administration. Horace Cooper previously served as Counsel to the Honorable Richard K. Armey, (Majority Leader of the United States House of Representatives from 1994 - 2002). Mr. Cooper’s interests include current issues involving law and American society, political forecasting, and the changing makeup of the United States Supreme Court.
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