Donald Sterling’s Battle to Maintain Trust Control

Interesting issues in Probate Law are often brought to light in the wake of celebrity cases. The recent outrage over Donald Sterling’s racially inappropriate audio recording has quickly led to a battle over control of the trust that owns the Los Angeles Clippers. Donald’s wife of 58 years, Shelly contends that due to Donald’s mental state, he no longer has the capacity to serve as trustee of their living trust. She is contending that three doctors who have recently examined her husband find him unable to perform his duties as trustee.  Most trusts provide that upon the finding of incapacity of one spouse, the “healthy” spouse then takes over management of the trust, leaving Shelly with control of the Clippers.   

Mrs. Sterling has entered into a deal with Steve Balmer, the man who ran Microsoft for over a decade, concerning the sale of the team which essentially was ordered by the National Basketball Association.  The debate over Donald’s mental state partially hinges on his performance in several psychological tests, as well as a brain scan that displayed signs of early stages of Alzheimer’s disease.  Mr. Sterling contends that he is still competent and, that, therefore his wife does not have the authority to sell the team.

A hearing has been set to begin Wednesday July 7th to determine Mr. Sterling’s competency. Obviously, Mr. Sterling is going to bring in doctors to testify that he is competent and attempt to poke holes in the doctors who previously examined him.  He will probably also attempt to demonstrate that he is intimately involved in the running of the rest of the empire he has created and may show that he even is practicing law.  

It is this estate planning and probate attorney’s perspective that it is going to be difficult for Mrs. Sterling to prevail.  While I have been wrong before, and will be wrong again, it appears to me that Mr. Sterling is still competent.  While he may not be two years from now, it is the present that matters.

This case demonstrates that even with a mechanism in place to remove a trustee, there can still be issues.  Doctors can disagree.  Nevertheless, it is still a lot better to have a mechanism in place, than not to have one because the alternative to that is a conservatorship proceeding.  More on that in a subsequent post!