Believe it or not, there have been a number of cases reported where an individual has chosen to adopt their significant other for estate planning benefits. This is highly unusual and presents a number of questions ethically and morally, but has been getting a good amount of media exposure lately. The main cause of this media coverage may be the highly publicized and controversial case of multimillionaire John Goodman.
John Goodman, 48, is a resident of Palm Beach, Florida who recently adopted his 42 year old girlfriend as an estate planning tactic. John Goodman had created an irrevocable trust on behalf of his two children. He placed $1.5 million in the trust and over the years it has grown to several hundred million. Goodman assigned the Bessemer Trust Company as trustee to oversee the trust on behalf of his minor children. However, Goodman has become dissatisfied with the services rendered by Bessemer and sought a way to remove them from the trust. However, because the trust is “irrevocable” it cannot be changed (which was necessary to provide the needed protections on the funds for his children).
Goodman is currently awaiting trial for a drunken hit and run that resulted in the death of a 23 year old man and occurred 2 years ago this month. The judge ruled that the money in the children’s trust was off limits in the case. The judge made this decision based on the fact that the funds in the trust were unavailable to Goodman and for the sole benefit of his children, and therefore would not be considered in the case.
However, due to Goodman’s dissatisfaction with Bessemer handling the trust, he decided to use a different method to ensure the funds were appropriately handled – he adopted his girlfriend. As his “child”, she would be considered one of the beneficiaries and could overturn any action taken by Bessemer that Goodman did not agree with. A written agreement dictated that the girlfriend would receive 5% of the trust funds along with a salary, and the rest of the funds would remain for the children.
Unfortunately for Goodman, this plan backfired on him. In fact, the judge overturned his prior ruling, now stating that the funds in the trust were accessible in the consideration by the jury for any damages paid to the young man’s family. The judge felt that the intimate relationship between the now father and daughter put the funds within Goodman’s control, thereby making them fair game on the trial.
Goodman is now seeking to undo the adoption of his girlfriend and get the judge to reverse his most recent ruling. They have also asked to delay the trial until the adoption matter can be sorted out.
Despite ethical and moral issues that come to mind when considering the concept of adopting a significant other, it is a volatile issue in estate planning as well. While his method would have worked from a probate standpoint, if he had chosen his trustee more wisely it never would have been necessary.
(Read the recent Forbes article on John Goodman)
Whether they are ordinary or extraordinary, all changes to your estate plan should be done with a qualified attorney who focuses their practices solely on estate planning. At Morris Hall we help our clients make vital decisions about their planning on a daily basis. Schedule a free consultation with one of our attorneys and discover how we can assist you with your planning!
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At Morris Hall, we have focused our legal practice on estate planning for over 40 years. Along with estate planning, our attorneys help clients and their families with matters of probate, trust administration, wills, powers of attorney, business planning, succession planning, legacy planning, charitable gifting and other important legal aspects. We also have divisions in financial, real estate and accounting to help you incorporate all of your planning together, ensuring that everything works perfectly for your needs and situation. Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Tucson, Prescott, Flagstaff and Arrowhead. Contact us today at 888.222.1328 to schedule an appointment!
This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation
This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.
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