Welcome!

For your reading pleasure, below is PLDO’s inaugural issue of Florida Focus. Reading legal articles can be boring. We get it, which is why our approach is to tackle hot topics and timely issues in a clever (hopefully) and interesting way. In this issue, we show how pop culture and the law intersect in HBO’s hit show, Succession, to provide you with some poignant lessons.

Our upcoming issues will help navigate the unique-to-Florida processes, such as relocating to Florida with tips on how to avoid being pulled back into your home state for taxes, establishing domicile, and explaining the Florida real estate taxes.  As some of you may know, we recently expanded our footprint. Attorney Joshua Butera has joined the Sunshine State team, bringing first-hand experience to Florida relocation, as well as corporate and transactional expertise.  Our Trusts and Estates Department continues to be available for your estate planning and administration needs, and the firm’s other departments stand ready to assist you with your other legal needs. We hope you enjoy this bimonthly addition to your inbox and consider us available at your convenience - even if it’s just for a TV show recommendation!

OCTOBER 2023 ISSUE

I’ve Watched Succession - Why on Earth Would I Give My Kids That Level of Power?

How a Holographic Will Can Lead to Litigation

Estate Planning for the Business. How to prepare for the death of a Business Owner?

I’ve Watched Succession  - Why on Earth Would I Give My Kids That Level of Power? 

By: Leah A. Foertsch, Office Managing Partner, Estate and Trust Planning, Administration and Litigation Team

Step into the “way back” machine when a younger media mogul, Logan Roy, was contemplating the succession of his empire and grooming his children by giving them management positions in the company.  This is a common scenario in business, as well as estate planning. Unfortunately, often due to inadequate communication, issues can erupt between the generations.  This is also true in trusts, where the parents may appoint the children, or some of the children, as trustees.

A potentially dangerous scenario can occur when the drafting directions indicate the eldest child should serve in all the fiduciary and management appointments, even if they are not intellectually or constitutionally capable in serving in the role.  While less common today, we do still see this in older trusts in which terms are still in effect.  A particular problem arises when a sibling gets to make discretionary distributions for another sibling.  There’s almost always personal politics , i.e. one perceives the other as not working as hard, or having it easier, all of which lead to hiccups, delays, and malfeasance, in administration. In making trustee appointments, one’s considerations should be based on acumen and personality, not simply order of birth.  Consider the circumstance where the oldest child is given the appointment, but the youngest is the one who is actually employed by, or participates in, the family business.  Arguably, the youngest would be in the better position to continue the business. 

Clients often ask, “how do I balance that and give the youngest control without hurting the feelings of the oldest?”  My response: “Communication.”  It is always best, whenever possible, that the family hold a meeting - or series of meetings - to discuss transitions in control and trusteeship.  Your estate planner can help to facilitate this conversation.  It is never too early to open the lines of communication. 

How a Holographic Will Can Lead to Litigation

By: Peter S. Strobis, Associate, Estate and Trust Planning, Administration and Litigation Team

In season four of Succession, Logan Roy, the patriarch of the family and acting CEO of Waystar Royco, suddenly passes away amid a corporate merger. The majority ownership of the company was divided amongst the Roy Family, in what appears to be a series of highly sophisticated estate and tax planning strategies, resulting in the family members having significant power over the management of the company.

After Logan’s death, a typed document is found in his safe that may or may not be Logan’s Last Will and Testament. The document contained “testamentary intent,” that appears to express the desire that Logan’s son, Kendall Logan Roy, be appointed as the next CEO of Waystar Royco. Throughout the first four seasons, Kendall struggled with substance abuse, mental health issues, and poor decision-making leading many to believe that Logan may have begun looking outside the Roy Family for his successor.

When the Will is found, the characters immediately point out that Logan, or someone else, attempted to edit the terms of the document by making handwritten notes and either underlining or striking through the name “Kendall Logan Roy.”  Did Logan underline Kendall’s name to confirm his commitment to his son, or did Logan determine that Kendall was ultimately unfit for the role?

When a Will is handwritten, either completely or partially, and not witnessed or notarized, the document is generally considered to be a “holographic will.” In Florida, a handwritten will is only valid if executed in the presence of two witnesses. Importantly, if a testator in Florida attempts to make handwritten changes to the their will, the handwritten amendments will likely not be honored by the Probate Court.

It is important to know that the laws differ from state to state. In New York, for example, a holographic will - even if no witnesses are present - can be validly admitted to Probate if it can be proven that the amendments are in the testator’s handwriting and that the testator intended for the writing to be incorporated in the Will. While in Florida, the Courts will likely not entertain any arguments to admit an unwitnessed last will and testament, barring extreme circumstances.

It is striking that Logan Roy, who undoubtedly hired top attorneys to parcel Waystar Royco’s ownership between the family, still relied on a handwritten note to govern the succession of his multi-billion-dollar conglomerate. It just goes to show that these scenarios can, and do, happen. If you wish to make changes to your will, trust, or corporate governance, it is critical to consult an estate planning attorney licensed in the jurisdiction of your current residence.

Estate Planning for the Business. How to prepare for the death of a Business Owner

By: Joshua J. Butera, Senior Counsel, Corporate & Business Law Team

In the final season of “Succession,” Logan Roy’s death creates a power vacuum within Waystar Royco, the fictional media conglomerate that Logan founded and acted as CEO of until his death. This raises a difficult question that many, if not all, business owners face: “When I die, what happens to my ownership in the company?”

The equity in the business is personal property that passes according to the owner’s estate plan. However, passing the right to own and control a business is substantially different than passing on a memento. Your heirs may not be equipped to run the business. Passing the business on to the wrong person could cause a once-profitable business to become a major liability for the heirs. If the business has multiple owners, your partners likely do not want to be partners with your children or spouse. So, what does a business owner do with his interests?

To maximize value, the owner must identify a buyer for the equity. When a business has multiple owners, the succession plan is generally simpler as the remaining partners can agree to buy out that equity of the deceased owner. This can be done through a properly drafted Shareholder Agreement or Operating Agreement.

If the business is solely owned, then the owner should develop a transition plan that identifies who will succeed to the business and how the business owner’s heir will receive value for the business’ equity. The owner could transfer a non-controlling equity interest to the heirs, which would provide a continuous revenue stream while ensuring that control of business stays with the chosen successor. It might also make sense for the sole business owner to go one step further and sell the business during his or her lifetime.

Owners of businesses - large and small - can learn a cautionary tale from the untimely demise of Logan Roy, who may be rolling over in his grave as his son-in-law now controls the corporation he founded.

The fictional Roy family might be filthy rich, but there are still plenty of estate and business planning lessons you can learn from their mistakes and drama. To discuss the issues raised above, and more, reach out to Leah, Pete, Josh, or any of our corporate or estate planning attorneys at 561-362-2030 (FL office) or 401-824-5100 (RI office).

PANNONE LOPES DEVEREAUX & O'GARA LLC
2424 NORTH FEDERAL HIGHWAY, SUITE 260
BOCA RATON, FL 33431 | 561-362-2030 | PLDOLAW.COM

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