A trial will be held next month to determine whether Donald Sterling, owner of the Los Angeles Clippers, was properly removed as co-trustee of the family trust that owns the NBA franchise. Sterling was forced to sell the Clippers after he made racist comments that were recorded and distributed to media outlets. Sterling has since threatened to sue the NBA over the forced sale, and has waffled back and forth on whether to proceed with selling the team for $2 billion dollars to former Microsoft CEO Steve Ballmer.
In May, Sterling was found to be mentally incapacitated, which allowed his wife, Shelly, to become sole trustee of the family trust. As sole trustee, Shelly has the authority to negotiate a sale of the Clippers without her husband’s consent. Shelly requested the impending trial to prove Sterling’s mental incapacity so that she can proceed with the sale.
The issue at trial will be Donald Sterling’s competency. If found competent, he will have the authority to act as co-trustee of the family trust and determine whether to keep the franchise or proceed with the sale to Ballmer. There are reports that the trust’s terms provide that Sterling can be ruled mentally incapacitated after being evaluated by two doctors. This is significant to the trial because, according to additional reports, three independent doctors evaluated Sterling in May, each concluding that he is incapacitated and incapable of managing his financial affairs as trustee.
You might wonder why this case involves probate court. Most people associate probate with death. Probate establishes the validity of a decedent’s will, or, if the decedent dies without a will, probate determines the decedent’s heirs. Probate courts also handle incapacity issues. A living probate is a legal proceeding that is designed to protect a mentally incapacitated person who is unable to manage his or her financial affairs. The probate court has a duty to appoint someone to manage and assume the incapacitated person's financial matters.
In this case, Shelly Sterling’s objective is to have a judge confirm the mental capacity provisions of the family trust. If the judge confirms that Donald Sterling is mentally incapacitated, then Shelly Sterling, acting as sole trustee, can move forward with the sale to Ballmer.
The probate court will hold a four-day trial beginning July 7.
Contributed by MH Phoenix Estate Planning Attorney Darren Richardson.
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