Celebrity Estate Lessons – Donald Sterling

Donald Sterling

We often talk about setting up estate plans in order to make sure your wishes are protected against outside influences. But another important facet of estate plans is to protect you against your future self. Such was the case for Donald Sterling.

Donald Sterling bought the LA Clippers basketball team in 1981. However, after making racist remarks that were broadcast by TMZ in 2014, he was given a lifetime ban from the NBA. This was not the first time he was accused of racism. After the ban was put in place, Sterling’s wife prepared to sell the team for $2 billion dollars, quite a gain on his initial investment of $12.5 million dollars.

This is where the estate planning comes into play. In order to provide protection from multiple sexual harassment and discrimination lawsuits, he created a business which acted as the actual owner of the team. He then put the business in a Trust, with both himself and his wife, Shelly, acting as Trustees.

Back to the story: Sterling originally was onboard with the Clippers’ sale, but as the date loomed closer he changed his mind. Shelly filed suit to have him removed as a Trustee because of the early stages of Alzheimer’s. The judge found in her favor and, although Sterling appealed, the 2nd District Court of Appeals upheld the ruling. The sale went through.

You might be wondering how this could provide protection for Sterling. Well, in this case, he seems to have had trustworthy people looking out for him, but this isn’t always the case. Depending on the way the Trust is written, an outside influence, maybe his mistress, could have convinced him to divert millions of dollars to her bank account or for other fun gifts. Even without the outside influence, as his mental capacities declined, he could start making decisions that aren’t in his best interest.

As you can see, it’s important to make sure your estate plan is worded properly to cover all eventualities. This is why it’s important to talk to professionals (like us) who can bring up common problems you may not have considered. So when you’re ready to have your estate plan written, give us a call to schedule your free consultation.