The Ultimate No-Contest Clause--Russian Style.
A no-contest, or in terrorem, clause, is frequently used in wills, trusts and other estate planning documents to minimize the likelihood of a disgruntled beneficiary challenging the estate plan. The phrase ‘in terrorem’ is Latin meaning ‘to frighten’ or ‘terror’. The basic concept is that if a beneficiary launches an attack on the estate plan and is not able to convince a court to change it, then that beneficiary loses any gift under the estate plan. A typical no-contest clause might reduce an expected intestacy gift (perhaps 50% of the estate), down to something smaller, perhaps 10% of the estate. Under this hypothetical, if the beneficiary accepts the estate plan, he receives the 10% gift, but if he challenges the plan (hoping to receive 50%) and loses, he receives nothing. No contests clauses are quite common in California and have been the subject of evolving legislation and extensive litigation.
Now from Russia comes penalty that exceeds anything dreamed up by the most creative estate planner. On February 12, 2008, Badri Patarkatsishvili, described as a post-Soviet Oligarch, died of a massive heart attack leaving an estate allegedly valued at billions of dollars. According to his family, Mr. Patarkatsishvili did not leave a will. In a recent Los Angeles Times article, a Russian-born New York lawyer named Emanuel Zeltser appeared at Mr. Patarkatsishvili’s wake and advised the grieving widow that her late husband had signed a secret will naming him and a half-cousin as executor. During the following month, attorney Zeltser and the half-cousin sought access to Mr. Patarkatsishvili’s global investments. Mr. Patarkatsishvili’s family sued in U.S. federal court, accusing the two Americans of trying to loot the huge estate with forged documents. The family called Zeltser's documents "invalid …" noting that several "appear to be forgeries".
According to the Los Angeles Times, attorney Zeltser had a very colorful background. Born in Siberia, Zeltser immigrated to Texas in 1974 and in 1990, was admitted to practice law in New York. During his time in the United States, Zeltser has been sued at least three times for alleged fraud including one New Jersey case where a jury concluded that Zeltser had wrongfully seized a business and was ordered to pay more than $2 million in damages. In 1993, attorney Zeltser was retained by a Russian bank, but was later accused of using his position to steal as much as $6 million of investment accounts. An attorney for the bank declared that Zeltser was a "career con man" who "forges documents on a routine basis."
In early March, Zeltser met several times with Boris Berezovsky, another Russian oligarch and former business partner of Mr. Patarkatsishvili. While Mr. Berezovsky backed Mr. Patarkatsishvili’s widow, Zeltser allegedly proposed they work together instead and drafted an agreement to secretly divide most of the assets between them, leaving only 15% for the family. On March 11, 2008, the offer was rejected when Messrs. Zeltser and Berezovsky shared a meal at a London restaurant. After the meal, Zeltser allegedly boarded Berezovsky's private jet believing that he was heading to Miami, but instead landed in Minsk, the capital of Belarus. Zeltser was arrested at the airport and charged with economic espionage and using false official documents to defraud Mr. Patarkatsishvili’s estate. After a closed-door trial, Zeltser was sentenced to three years in Penal Colony #15 in eastern Belarus, where he remains to this day.
I can think of at least a few clients over the years that would love to include such a clause in their estate planning documents. While not possible in the United States, attorney Zeltser’s case certainly presents a cautionary tale for those fighting over estate planning documents in other jurisdictions.
Treated Like a Dog?
Now it appears that poor Trouble will not receive the entire gift and have to survive on a mere $2 million. Helmsley’s grandchildren alleged that Helmsley was not mentally competent when she signed the 2005 will which left the large bequest to Trouble. According to this article in the New York Post, a Manhattan judge approved an agreement to reduce Trouble’s inheritance from $12 million to $2 million. Under the new deal, $10 million of Trouble’s bequest will go to Helmsley’s large charitable foundation.
It seems only appropriate that Leona Helmsley, dubbed by some as the “Queen of Mean” would have an equally controversial animal. According to a former housekeeper, Trouble slept in Helmsley’s bed and was fed chef-prepared meals in porcelain bowls and silver trays. This same housekeeper actually sued Helmsley for nerve damage she allegedly suffered after being repeatedly bitten by the animal. Trouble’s care taker estimated Trouble’s annual expenses at $190,000 including an estimated $100,000 for the dog’s security squad (which was apparently warranted because of the alleged death threats against Trouble). Given that Trouble is already nine years old, Trouble’s trustees did not oppose the settlement, apparently believing $2 million was adequate for Trouble’s care.
The Never Ending Will Contest
Dummar, at the time a Utah service station owner, claimed that he picked up Howard Hughes along a desolate desert highway approximately 150 miles north of Las Vegas, Nevada. Hughes allegedly asked Dummar to take him to the Sands Hotel in Las Vegas and during the trip, Hughes revealed his identify to Dummar. After Hughes death, a handwritten will was discovered at The Church of Jesus Christ of Latter-day Saints (“LDS”) in Salt Lake City. The new will (commonly referred to as the “Mormon Will”) was allegedly prepared in 1968 and had a number of strange discrepancies including the fact that it left money to the LDS (Hughes had never been a member), named a dismissed former employee as executor and referred to Hughes’ famous flying boat by the term “spruce goose”, a moniker Hughes allegedly despised. Most importantly for Dummar, the Mormon Will left 1/16th of Hughes’ estate to Dummar. In June 1978, after a lengthy trial, the Mormon Will was ruled a forgery by a Nevada jury and Dummar received nothing from the Hughes estate.
In early 2005, a retired FBI agent claimed to have found new evidence that Dummar’s story was true. On June 12, 2006, Dummar filed another suit in Utah against the primary beneficiary of the Hughes estate, alleging that the defendants had conspired to defraud Dummar by concealing evidence and presenting perjured testimony in the prior trial. On January 9, 2007, Dummar’s second suit was dismissed.
Almost ten years after his initial defeat, Dummar is back again this time having filed a new lawsuit in a Denver court attempting to revive his claim that some of the beneficiaries of the Hughes estate conspired to deprive him of his inheritance. Dummar, now working as a delivery man, claims to have a new witness: a former Hughes’ employee who allegedly corroborates critical details as to why Hughes would have been lost in the desert in 1967.
The Denver court is expected to rule later this year as to whether Dummar should have a new trial on the issue. In the meantime, rumor is that Hollywood producers are considering a sequel: Melvin and Howard part deux.
