A badly in debt woman dies leaving the proceeds of substantial insurance policies to her children only to have her trust contested by relatives who claim an amendment naming the children as beneficiaries is invalid with no witnesses, misspelled names, suspicious signatures, and was never given to previous trustees for review as required by agreement. A long, expensive, and protracted legal battle likely is brewing.
Such events are not that uncommon, especially when there’s lots of money involved. However, these traumatic instances provide teaching examples of things to avoid – and things to absolutely insist on – in estate planning, say advisors. In the case cited above, the deceased is Elvis Presley’s late daughter, Lisa Marie. Her estate is being challenged by her mother Priscilla. Priscilla was the original trustee, along Lisa Marie’s former business manager, before an amendment to the trust, called a codicil, surfaced after the celebrity’s death. This amendment cut them both out as trustees and named Lisa Marie’s children as executors and trustees.
Millions at stake
At stake is perhaps as much as $35 million from three life insurance policies – with at least $4 million that will have to go toward settling Lisa Marie’s debts, including $2.5 million to the IRS.
“The alleged issues in the Presley trust appear to be examples of sloppy lawyering or of someone looking to make the changes themselves without counsel,” said Glen Goland, senior wealth strategist at Arnerich Massena, in Portland, Oregon. “The second lesson is that folks with this sort of wealth ought to consider hiring a professional trustee rather than appointing family members. There are a variety of ways family members can be involved in trust administration; making these individuals the sole trustee of substantial assets often leads to very expensive infighting.”
A request to add a codicil to a will or trust happens fairly frequently, advisors say. But some reject them out of hand.
“Clients come to our firm and ask us to prepare codicils to their wills quite often,” said attorney Jennifer Cona, managing partner, Cona Elder Law, in Melville, New York. “They’ll say ‘I just want to change my executors,’ or ‘I just want to add my other son to receive one-half of the house.’ We don’t allow it. We insist that the client sign a new will, crossing all t’s, dotting all i’s and following all proper legal procedures and requirements. We don’t take shortcuts, and neither should have Lisa Marie.”
That’s apparently what happened in the Presley case, though the origins may go back to Elvis himself, who died in 1977 at age 42. The King left an estate valued at the time of just $5 million – about $20 million when adjusted for inflation.
Elvis’ will appointed his father, Vernon, as the executor and a trustee of his estate. The beneficiaries of the trust were Vernon, Lisa Marie, and Elvis’ grandmother, Minnie Mae Presley. Lisa Marie was just nine years old at the time of Elvis’ death, so her inheritance was held until she turned 25. When Vernon died in 1979, Priscilla was named as one of three trustees in Elvis’ will. After Minnie Mae’s death in 1980, Lisa Marie became the only surviving beneficiary and she inherited the entire estate on her 25th birthday on February 1, 1993. By that time, the estate had grown to about $100 million thanks largely to Priscilla’s administration and management.
“I think having a large trust like his terminating at age 25 was a mistake,” said Herb Nass, partner and co-chair, private client services at Davis & Gilbert LLP, in New York City. “I think Elvis would have been well advised to set up a trust for an older age distribution or perhaps even for Lisa Marie’s lifetime so he could be sure that it would go to her kids.”
Indeed, Lisa Marie reportedly blew $100 million during her years as an adult and was millions of dollars in debt despite the estate being flush with cash thanks to at least two life insurance policies – one for $25 million and one for $10 million. There may be a third $10 million policy that could have lapsed.
In 1993, Lisa Marie established a trust that was restated and amended in 2010 naming her mother and her former business manager, Barry Siegel, as trustees. The codicil in question appears to have been written in 2016, booting Pricilla and Siegel as trustees and appointing Lisa Marie’s daughter and son, Riley and Benjamin Keough, as trustees, and naming beneficiaries as Riley, and 14 year-old twin sons Finley and Harper Lockwood, who were to receive equal amounts.
Attorneys deny knowledge of codicil
But Pricilla’s attorneys say they had no prior knowledge of the codicil, which an agreement required, and furthermore are contesting the documents’ authenticity, saying the amendment was not witnessed or notarized, Priscilla’s name is misspelled, and Lisa Marie’s signature may not really be hers.
“I think Priscilla has a pretty strong argument, here,” says Nass. “The 2010 trust agreement was very specific as to how things could be amended in the future. And the fact that was not followed could be a fatal flaw for the people who tried to amend it, whether that was Lisa Marie or others.”
In 2018, Lisa Marie sued Siegel, for allegedly “reckless and negligent mismanagement” of her estate, which had left her with only $14,000, according to court documents. Siegel countered and claimed that the low amount was a result of Lisa Marie’s excessive spending. He also demanded $800,000 in damages from Lisa Marie for non-payment. Siegel said that Lisa Marie’s 2005 deal to sell 85 percent of her share of Elvis Presley Enterprises, which he negotiated, erased more than $20 million in debts Lisa had incurred and netted her more than $40 million in cash and a multi-million dollar income stream. Lisa Marie countered that the deal lost her millions because of an investment in a production company that went bankrupt in 2016. In a 2018 divorce document, Lisa Marie said she was $16.7 million in debt from what she owed in income taxes, a defaulted mortgage and credit card bills.
All which leads to a messy contested estate.
“I think a lesson to be learned here is that it's probably a good idea of use the same attorney if you add an amendment,” said Nass. “I don't think it was the same attorney who did the 2010 trust, who did the purported 2016 amendment. By switching attorneys in midstream, they might have shot themselves in the foot. And if indeed you do change attorneys, you better make sure your new attorney gets it right and follows the instructions very carefully.”
A preliminary hearing on the matter is scheduled for April 13. Nass said he believes the issues go well beyond who gets the money.
“I'm not convinced that this is really about the money,” he said. “I think Priscilla feels very proprietary about this trust and these are her grandchildren. I sense she wants to stay involved because she feels she can look out for their best interests. She knows the family history better than any of them do and she would do a better job administering the trust than anybody else.”
Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].