Some Forms of Trust
You have worked hard, saved diligently and amassed enough money to leave your children or grandchildren a tidy Estate. The big question that arises is – should you limit how or when they use it?
Whilst it is a generally known fact that more people prefer to use Wills than Trusts in rewarding certain types of behaviour and discouraging others by not bequeathing certain assets to them. Trusts will generally perpetuate your values and help heirs cultivate good values like responsibility, enthusiasm and service. However, if created incorrectly they can create as much conflict as you can find.
The True Story Of Whitney Houston
Whitney Houston, the popular American singer, is no stranger to family fights in court. In 2002, the entertainment company owned by her father, John Houston, sued her. John Houston said publicly that his company was owed $100 million and he expected his daughter to repay it. He died in February of 2003 and the case was dismissed not long thereafter.
John’s wife, Barbara, filed her own lawsuit against Whitney in December of 2008, claiming that Whitney was the sole beneficiary of a $1 million life insurance policy of her late father.
Barbara Houston claimed that Whitney had agreed with her father that the money would be used to pay off a mortgage that Whitney held over John and Barbara Houston’s home. Apparently, Whitney lent her father $723,000 in 1990 and this loan was secured by a mortgage against his house, payable to Whitney. Barbara’s lawsuit alleged that the life insurance was purchased to pay off this mortgage and the remaining balance was to be turned over to Barbara.
Whitney filed a counterclaim. She claimed that the life insurance was intended to repay her for other money she had lent her father and not pay off the mortgage. Whitney also counter-sued her late father’s wife to force her to repay the mortgage. She even wanted interest on the mortgage, totaling $1.6 million.
There was, however, an encore to the fireworks. Whitney decided to use the countersuit as a prime opportunity to slam her “stepmother.” She pointed out that Barbara was 40 years younger than her father, met him as a maid cleaning his house and dated him for three years before the divorce from Whitney’s mother.
Who Is Telling The Truth?
Did John Houston really want Whitney to keep the money as a repayment for other money owed or had he trusted Whitney to pay off the mortgage and give the rest of the money to Barbara?
The problem is, we do not know. John should not have relied on naming Whitney as his life insurance beneficiary without an agreement clarifying why he did so. Even better he should have created a Trust, named it as a beneficiary of the insurance and direct the Trust as to the exact person who should receive the money and why.
Instead of clearly documenting his intent, John took a shortcut. Due to this, his wife and famous daughter are biting their nails and snapping their teeth at each other in public.