Celebrity Estates, 2007

Dannielynn & Marilyn

ublicity, privacy, celebrity. Fame has great value, but comes at a price. There is a fine line between exploiting one's own celebrity and still retaining privacy rights. How much posthumous control can a celebrity have over his or her own image?

Recent developments provide a comparison of publicity and privacy rights involving the estates of Anna Nicole Smith and Marilyn Monroe. For the estate of Ms. Smith, there is a more pressing concern: Will her only surviving child be entitled to inherit under the terms of her will?

A Pair of Pinups

Art imitates life, but sometimes a larger-than-life icon such as Marilyn Monroe turns the tables and appears to live a life so glamorous and surreal that it exceeds real life and imitates art itself.

More than a generation later, Anna Nicole Smith consciously emulated Marilyn Monroe. Both were unknowns who came to Hollywood, made money as blonde pinup girls, changed their names, and ultimately become celebrities. But the parallels extended to the tragic forces that affect such lives in the limelight and Anna Nicole Smith died far too young…just like Marilyn Monroe.¹

The lines between life, art, reality and reality show have been blurred beyond recognition. Scandal has only heightened notoriety and potential market value of the star's image after death. But who will have control over the estate of Anna Nicole Smith?

Two Men & A Baby

Recently, the will of Anna Nicole Smith executed on July 30, 2001, was submitted to probate in California. Smith's companion Howard K. Stern is the executor under the will. Larry Birkhead, who has now been proved to be the father of Anna Nicole Smith's only surviving child Dannielynn has been named the child's guardian as well, at least for purposes of probate.

But how will the court interpret the clause of Anna Nicole Smith's will which disinherits all future children? The will states,

" * * * I have intentionally omitted to provide for my spouse and other heirs, including future spouses and children and other descendants now living and those hereafter born or adopted, as well as existing and future stepchildren and foster children."

Such an expression would preclude inheritance under UPC §2-302. However, the almost universal rule is that such a disinheritance provision (i.e., which fails to make an affirmative disposition of property) is not effective.²

In, Estate of Poisl, 280 P.2d 789 (1955), the Supreme Court of California, En Banc, ruled that a general disinheritance clause was ineffective as to an heir whom the clause failed to specifically mention.

However, see, Estate of Hassell, 168 Cal. 287, 142 P. 838 (1914), in which the Supreme Court of California upheld the following clause: "Those of my heirs not herein mentioned has (sic) been omitted by me with full knowledge thereof." See also, Smith v. Crook, 160 Cal.App.3d 245 (1984), in which the California Court of Appeal ruled that extrinsic evidence of intent is not admissible, that the intent to disinherit must appear on the face of the will.

At the time the will was drafted, Ms. Smith had only one child, Daniel. Had he not died only a few days after his sister was born, he might now stand to inherit the entire estate. In Daniel's absence, would Anna Nicole Smith's only surviving child be excluded under the will? If so, a partial intestacy would result and heirs not specifically disinherited would share the estate. That would cause the estate to pass to Anna Nicole Smith's parents, from whom she was estranged.

Not probating the will must have occurred to some of the parties. For months, only a copy of the will was located, leaving open the possibility that the original was lost or intentionally revoked. But not probating the will opened the door to other issues such as administration of the estate in a jurisdiction other than California or perhaps having Fergie Arthur, the estranged mother of Anna Nicole Smith, petitioning to be appointed administrator of the estate.

The Scrivener's Testimony

Bruce Ross, an attorney representing the executor and the estate, indicated that the attorney who drafted Anna Nicole Smith's will would testify that Smith had said, "I probably won't have future children, but if I do I would want them to be the beneficiaries of the trust." Smith supposedly disinherited future children to avoid having someone "pop out of the woodwork."

A few observations may be made about such a representation by a scrivener concerning a testator's "true intentions" when they directly contradict the terms of the will. Such testimony begs the question, "if you understood the testator's intent, why didn't you express it plainly in the will?" If Anna Nicole Smith told her draftsman/attorney that she would probably want a future child to be her beneficiary, then he must admit that the will failed to express his client's stated purpose.

In addition, an 18-page will of a high-profile celebrity should, without any question, have included a back-up beneficiary.

While a male testator may be wary of heirs "popping out of the woodwork" due to unforeseen paternity claims, a female testator would generally be present to attest to the origin of a future natural child. A good draftsman would have distinguished such a natural child from someone pretending to have been adopted in some way.

In any event, this circumstance is not a typical scrivener's error such as naming eight of a testator's beneficiaries but accidentally omitting the ninth, or purporting to dispose of shares adding up to 101% of the estate due to poor math.

A Secret Trust?: If this excuse of "scrivener's error" or hearsay testimony of what Anna Nicole Smith "would have wanted" fails to impress the court and appears to be a convenient memory that doesn't line up with the key provision of the very document the witness was paid to draft, could a device such as the "secret trust doctrine" save the day?

A secret trust is essentially an equitable or constructive trust established by a court to effectuate a decedent's true intentions. However, this approach is not recognized by the Uniform Probate Code or many jurisdictions outside of New York. Moreover, the New York precedents are distinguishable from the facts of the Smith will.

For example, in the leading 1884 case of, In re O'Hara's Will, the testator disinherited her relatives and left her residuary estate to her lawyer, her doctor, and her priest. Seriously.³

However, a contemporaneous letter instructed her three legatees to implement certain charitable purposes with the money. The Court found the silent acquiescence of the legatees to be an enforceable promise and recognized a secret trust to carry out the testator's explicit purpose.⁴

Writing about lower courts having to construct "legal contraptions" to implement doctrinal changes when anachronistic constructions fail to effectuate a testator's true intentions, an Oregon Law Review article notes that the secret trust approach would not apply in a case where the will is contradicted by an instruction to a third party as opposed to the beneficiary who is erroneously named in the will.⁵

Demonstrating Intent: There is no legal precedent for a tattoo constituting a holographic instrument. It is not in the testator's handwriting. It is not an expression in words.

But consider the following an equitable argument of sorts: A tattoo applied to Anna Nicole Smith's back of the image of her daughter Dannielynn was placed next to a pre-existing and similarly sized tattoo of her son Daniel.

The tattoo is not a random aesthetic design selected by a tattoo artist; it is applied at the direction and under the supervision of the testator. Though it does not come from the hand of the testator, it is at the direction of the testator and therefore comparable to a testator who is conscious but unable to write and directs an agent to apply his or her name to a document.

Though not expressed in text, the image is a permanent marking directly on the testator's physical person, indelibly expressing to the world that Dannielynn is of equal status to her first-born child. In the tattoo, Anna Nicole is posing with Dannielynn in her arms. It is a picture worth a thousand words in a will or a court brief. The testator's true intent here is not a mystery to be guessed at.

Here, the lengths to which Anna Nicole Smith went to protect her new baby and the love she demonstrated toward Dannielynn would dispel any doubt about this baby being someone who "popped out of the woodwork" with an illegitimate claim. Also, the brief time between the death of the testator's son Daniel and her own death supports an argument that she simply lacked the time to have a new will executed.

The Stakes Are High

Despite only having assets of approximately $710,000 at the time of her death, the estate of Anna Nicole Smith is a highly coveted prize. Future potential assets include:

Royalties from previous projects
Sale of Anna Nicole Smith's personal effects
Merchandising of the decedent's image
A portion of J. Howard Marshall II's $1.6-billion estate ranging from $0 to $475 million.

An indication of the value generated by being at the focal point of so much international attention is illustrated by the $1,050,000 paid by NBC Universal for rights to television appearances by Larry Birkhead. Photographs of Dannielynn have reportedly been sold for millions of dollars as well.

A new lawsuit pits Mr. Birkhead against his former attorney, Deborah Opri. According to published reports, Ms. Opri received at least $865,000 of the NBC payment, placed it in her attorney trust account, and has paid only $200,000 of it to Mr. Birkhead.

An action to determine and collect legal fees is now underway with Ms. Opri claiming $650,000 of fees based on an hourly rate of $475. Mr. Birkhead counters that Opri's expenses benefited her family and friends or were for her own "personal aggrandizement." He is seeking $885,000 in damages.

Even the brief spotlight of the Florida hearing for custody of the body of Anna Nicole Smith has made a national figure of Judge Lawrence Seidlin, who resigned in June, 2007, amid rumors that he would soon have his own television show. Taking a verbal jab at this development after the California probate proceeding, Larry Birkhead said, "It's a relief to see a judge in America who's not interested in getting his own TV show."

Original Icon

Forty years have passed since the death of Marilyn Monroe, but the star of her celebrity status shines on more brightly than ever. According to Jeffery Lotmoan of the licensing firm Global Icons, the most valuable dead-celebrity "brands" (after Elvis Presley) are Marilyn Monroe and James Dean.

At the time of her death, Marilyn Monroe's estate was valued at $800,000. However, she is currently ranked ninth on the Forbes list of top-earning "dead celebrities," with annual income of $8 million. The image of Marilyn Monroe has been licensed to Dom Perignon Champagne, Absolut Vodka, and General Motors. A new perfume is to follow.

Legal battles have recently come to a head over the rights to Marilyn Monroe's image. Four lawsuits had been pending in Indiana, New York, and California so determining the decedent's domicile was critical. Unlike copyright laws that are under Federal law, publicity rights vary under state laws.

Ms. Monroe was born and raised in California, which protects publicity rights, but she moved to New York seven years prior to her death. She left 75% of her estate to her acting teacher Lee Strasberg. When Strasberg died in 1982, rights to the Monroe estate were inherited by his young wife, who immediately launched a licensing business.

From 1982 through 1995, the business made $7.5 million. A more aggressive approach was taken after that and revenues increased dramatically. In 1999, Ms. Strasberg auctioned Marilyn Monroe possessions for $13.4 million. These items included the sequined gown worn when Monroe sang "Happy Birthday" to President John F. Kennedy in 1962.

Friends of Monroe objected to the auction because Monroe's will had directed Mr. Strasberg to distribute her possessions to her "friends, colleagues and those to whom I'm devoted." The secret trust doctrine would appear to be applicable here.

In recent years, the descendants of four deceased photographers who had taken pictures of Monroe have filed lawsuits to sell the images they inherited.

On May 4, 2007, a Federal judge in New York ruled that Monroe's rights of publicity ended at her death. This has cleared the way for the various photographs to be sold by other parties.⁶

TECHNICAL REFERENCES

¹ Marilyn Monroe died in 1962 at the age of 36 from an overdose of sleeping pills. Anna Nicole Smith died in 2007 at the age of 39 from a mixture of medications. Posthumous legal battles over both estates have focused on determining domicile.

² See, Moshman, Lessons of the Smith Estate, The Estate Analyst (March, 2007)

³ O'Hara from 1884 may have provided the original set-up for innumerable jokes. Here's one version. The doctor, the lawyer and the priest are called to the testator's bedside. Each is given $100,000 in a brown paper bag and swears to place it in the testator's grave prior to burial. The testator doesn't last the night. When he is laid to rest, each of the three trusted men placed brown paper bags in the gravesite. But a month after the funeral, the three met and the doctor admitted that the bag he threw into the grave had only newspapers because he'd donated the funds to the new hospital wing. The priest confessed that the bag he threw was filled with Psalms; he felt it would be wrong not to help the poor with those funds. The lawyer then professed to be shocked! Gentlemen, we gave our word. I am quite certain that the bag I threw contained $100,000; I enclosed my personal check for the entire amount!

⁴ See, Penzer and Santoro, Use of the "Secret Trust" Doctrine to Effectuate a Decedent's Intent, NYSBA Trusts and Estates Law Section Newsletter (Spring, 2007).

⁵ "For example, if a testator executes a will bequeathing property to a beneficiary but also expresses to that beneficiary an unformalized intent that he turn the bequest over to a third party (a so-called "secret trust"), courts have imposed an equitable constructive trust upon the named beneficiary to enforce the transfer over to the intended one. Courts thereby effectuate the testator's intent, despite her failure to comply fully with the statute of wills. The pretext for imposing a constructive trust in this case is prevention of "wrongdoing" by the beneficiary, who might otherwise break his (implicit) promise to the testator to hand over the bequest. But, as usual, this contraption comprises an imperfect antidote to the statute: For equity can only be summoned in the event of a wrong. Accordingly, if the testator instead informs someone other than the beneficiary of her intent that the bequest go on to a third party, the court cannot accuse the beneficiary of breaking a promise if he keeps the bequest. In such a case, there is no equitable remedy, although evidence of testamentary intent (the true desideratum) is essentially equivalent!" -Adam J. Hirsch, Inheritance Law, Legal Contraptions, and the Problem of Doctrinal Change, 79 Or. L. Rev. 527, footnote 113, (Fall, 2000). [Editor's Note: This excellent article is posted online.]

⁶ Shaw Family Archives, LTD. v. CMG Wordwide, Inc., (S.D.N.Y. 5-2-2007). "However, it is not necessary to resolve the question of domicile because neither New York nor California - the only two states in which Ms. Monroe could conceivably have been domiciled - permitted a testator to dispose by will of property she does not own at the time of her death. "