Family Wealth Transfer Planning and Trust & Estate Administration

Areas of Focus 

Manatt has one of the largest groups of trust and estate attorneys in California, with client service capabilities throughout the state. Our attorneys bring an extraordinary amount of experience to assisting high net worth individuals and families in implementing their wealth transfer strategies through effective tax and estate planning. We also advise trust companies, trust departments of major banks, and individual fiduciaries in all aspects of trust and estate administration in the U.S. and abroad. Our trust and estate attorneys counsel beneficiaries and creditors to help protect their interests in substantial estates and trusts in the U.S. and overseas. We provide trust and estate litigation and dispute resolution services to our clients, including representation in will and trust contests.

Family Wealth Transfer Planning
Our lawyers have particular expertise in developing personalized, creative estate planning solutions for high net worth individuals and families, including entrepreneurs, owners of substantial family businesses, and political, entertainment and sports figures. We use revocable trusts and all manner of irrevocable trusts to transfer wealth to succeeding generations in an estate, gift, and generation-skipping transfer tax-efficient manner. Charitable planning, asset protection, discount planning through the use of family limited partnerships and family limited liability companies and tax management strategies are incorporated into clients' estate planning as appropriate. Sophisticated planning techniques, such as grantor retained annuity trusts and sales to defective grantor trusts, are considered in appropriate client circumstances. We counsel owners of closely held businesses with regard to proper business structure and succession planning. Representative examples of Manatt's role as family wealth transfer advisors include the following:

• Manatt has been representing multiple generations of a single family for nearly 40 years, whose combined net worth approaches $1 billion. The patriarch of the family began to create the family wealth more than 60 years ago in the form of substantial commercial real estate holdings. Trusts that we established for the first generation 40 years ago are still in existence, and operate to benefit the second, third, and fourth generations of this family while maintaining control of the myriad business entities established to manage their holdings. In addition, the transfer of business interests to those trusts has created a freeze on the value of the assets that has saved the family hundreds of millions of dollars in estate taxes. We continue to plan with successive generations, each with its own issues, values, and concerns. Evidencing Manatt's ability to provide integrated services to our clients, our real estate attorneys work with the family and the senior management staff of their businesses on all of their business needs, thus providing them with legal counsel that considers all aspects of their personal and business lives.
• We are working with two siblings who inherited substantial wealth from their parents. The siblings each have their own families and their own values, but they are very much in business together. Working closely with our clients' financial advisor and accountants to ensure that all decisions are made with full information and analysis, our lawyers have helped the siblings to:
  
  • Administer their father's postmortem estate
  • Update their own respective estate planning documents
  • Create a family limited partnership as well as grantor trusts to which limited partnership units have been sold and gifted
  • Implement their philanthropic goals by creating both a charitable lead trust and a supporting foundation.
• Manatt represents a high net worth couple who have significant philanthropic goals. The clients have made substantial lifetime philanthropic gifts, and intend to leave the bulk of their estates to charities upon their deaths. Manatt lawyers helped to structure significant lifetime philanthropic gifts for them, including the donation of artwork to museums as well as the creation of endowments at various charitable organizations. In part through a highly successful grantor retained annuity trust that we designed, our clients also have transferred a substantial portion of their wealth to their heirs free of gift tax. We work closely with the senior staff at our clients' privately held company on all aspects of their estate and philanthropic planning.

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Trust and Estate Administration
Manatt lawyers counsel surviving family members through the entire process of postmortem administration of their family trusts, including estate tax matters and funding assets among newly established trusts. We also counsel numerous corporate and individual fiduciaries in all manner of probate and trust administration, including counseling trustees with respect to risk management in determining whether to accept trusteeships; advising with regard to administration matters, accountings, and exercise of trustee powers; and asking the probate court for instructions and modifications of irrevocable trusts. We regularly represent trustees and executors, individual and charitable beneficiaries, and creditors in uncontested, contested, and litigated probate court proceedings, including will and trust contests.

As an example of our trust administration capabilities, we provide ongoing representation to individual successor trustees in a multiple-year post-death administration of a $500 million trust. Our lawyers have assisted the trustees by:

• Advising on the management and disposition of worldwide business and investment assets
• Submitting estate and inheritance tax returns in the U.S. and in various jurisdictions in Asia
• Negotiating with Swiss bankers and their New York counsel to secure the repatriation of significant assets from several Liechtenstein Stiftungs
• Successfully defending against a $60 million estate tax audit after the IRS disallowed the marital deduction
• Counseling on U.S. income tax issues pertaining to numerous controlled foreign corporations and passive foreign investment companies
• Working with the California Attorney General to resolve issues pertaining to claims against the decedent's private foundation
• Negotiating with a public charity regarding the contribution of valuable real property from the decedent's private foundation

In an example of our corporate fiduciary representation, we prepared and filed a petition requesting the probate court to instruct the trustee to sell one of three condominiums owned by a private trust. The settlor/beneficiary of the trust was elderly and living in a nursing care facility. The trust lacked sufficient liquid assets to pay for the ongoing expenses of the beneficiary's care. The remainder beneficiaries vigorously objected to the sale of the condominium, arguing that a taxable capital gain could be avoided if the trust were to borrow money instead. When the only loan available to the trust was a subprime loan at a high interest rate, our probate attorney argued at the probate court hearing that, because of the high cost of borrowing in this circumstance, a sale was appropriate even if a capital gain was recognized. The judge agreed, and instructed the trustee to sell one of the condominiums.

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Litigation and Alternative Dispute Resolution
Manatt attorneys represent individual and corporate fiduciaries, charities, individuals, heirs, beneficiaries, and third-party claimants in a wide variety of trust and estate litigation matters in probate and civil courts, from initiation of a case through its final appeal. Our typical litigation representation employs a team approach, pairing a member of our trusts and estates practice group with a litigation attorney with specialized experience in trust and estate matters. The depth and variety of our experience in these matters allow our litigation team members to recognize circumstances in which expensive and time-consuming litigation can be avoided and more efficient alternative dispute resolution, such as mediation, can be employed successfully. The following examples illustrate several successful trust and estate litigation matters handled on behalf of Manatt clients:

Trustee Representations

• We took over as litigation counsel for a corporate trustee four years into a lawsuit initiated by the remainder beneficiary of a private trust. In less than a year, we completed discovery, and drafted and won summary judgment on all eight civil and all four probate claims, thereby avoiding the expense of a trial. In connection with our successful opposition to the petitioner's attempt to revive the appeal in this case, we won sanctions against the petitioner's counsel. Bryanv. Bank of America, 86 Cal. App. 4th 185 (2001).
  
• On behalf of a corporate cotrustee, we won our motion for judgment at the close of the remainder beneficiary's case on her claims for breach of trust and breach of fiduciary duty in connection with a seven-figure trust real estate investment. We also successfully defended this judgment on appeal.

Beneficiary Representations

• In a probate proceeding on behalf of the son of a deceased vineyard owner, we successfully prosecuted his claim to the family's 80-acre Napa County vineyard. Our client's claim was seemingly time-barred by a statute stating it could not be "tolled or extended for any reason." We made new California law by establishing that, notwithstanding this restrictive statutory language, equitable estoppel barred the application of the statute, and our client's claim remained viable. Battuello v. Battuello, 64 Cal. App. 4th 842 (1998).
• We protected the charitable interests of a Bay Area college in connection with an individual trustee's petition to modify the distribution provisions of an irrevocable trust. In response to our briefing in opposition to the petition, the trustee withdrew his petition and an amicable and swift resolution was accomplished.

Administrative Issues

• We made new California law in Wells Fargo Bank v. Superior Court (Boltwood), 22 Cal. 4th 201 (2000), in which, representing amicus curiae, our lawyers helped clarify and extend the scope of the attorney-client privilege for trustees of private trusts.

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