Why Estate Planning Matters

September 28, 2023

Estate Planning Observations

Original blog was written before Ms. Feinstein passed away.

When we think about Estate Planning, we primarily focus on making sure that our Wills are up-to-date and that we have Powers-of-Attorney in place should we become incapacitated and need assistance managing our affairs.  And while all of that is important, if you have a blended family (second or third marriage), things can get significantly more complicated.  And this kind of drama can impact even the highest levels of the “upper crust!”

Take the case of Senator Dianne Feinstein of California, which was recently documented by the New York Times.  Ms. Feinstein, now 90 years old, who is winding down her career of public service (in addition to her time in the Senate, she is also a former Mayor of San Francisco), finds herself in the middle of an increasingly bitter legal and financial conflict.  Presently, along with her daughter, Katherine, she is facing off against the three daughters of her late third husband, Richard Blum, who died in February of 2022 after a long battle with cancer.

Currently, the family is fighting over Senator Feinstein’s desire to sell a beach house in an exclusive neighborhood just north of San Francisco.   In yet another disagreement, the two factions are at odds over access to the proceeds of Blum’s life insurance proceeds.

Senator Feinstein, who was born into affluence, has long been among the wealthiest members of Congress.  She was considered rich in her own right in 1980 when she married Blum, himself a very successful millionaire financier.  After being elected to the Senate, she placed her investment securities into a blind trust that, today, is valued somewhere between $5 million and $25 million, according to her most recent financial disclosure which is required of lawmakers.

Combined, the couple’s fortunes continued to grow throughout their marriage. Her primary residence is a nearly 10,000 square-foot home in the prestigious San Francisco neighborhood of Pacific Heights.  They also had several vacation homes which, until recently, included a 36-acre ranch in Aspen, Colorado, which sold in March for more than $25 million, as well as a Lake Tahoe compound that sold in late 2021 for a reported $36 million.  Currently, she maintains additional properties in Hawaii, as well as Washington, D.C.

And, now . . . everyone wants their share of this combined estate, and there were not enough instructions actually put down in writing ahead of time.  Hence the current contentious drama!

Some of the combative issues that have emerged during this fight over Blum’s estate include questions about the full extent of his fortune, as well as Senator Feinstein’s health care costs from her bout with shingles earlier this year, and how much of those should be paid for out of Mr. Blum’s life insurance proceeds.

The two lawsuits were filed by Feinstein’s only child - daughter, Katherine, who has power of attorney over her mother’s legal affairs. The first lawsuit, over the beach house, says the property is in disrepair, that Dianne Feinstein no longer wishes to use it, and that she wants to sell it this summer or fall.

The second lawsuit concerns Blum’s life insurance proceeds and claims that the funds, which are supposed to be disbursed through a trust, have been held back by the trustees. The suit says that Feinstein has “incurred significant medical expenses” from her shingles issues and that despite Blum’s “intent to support his spouse after his death, the purported trustees have refused to make distributions to reimburse Senator Feinstein’s medical expenses.”

In response, the attorney representing the two trustees of Mr. Blum’s Trust says that there was never a refusal to pay any money to Feinstein, and has expressed further concern that daughter Katherine Feinstein, a former Superior Court judge in San Francisco, is acting out of personal interests and not out of those of her mother.

This issue will likely be tied up in the courts for some time and it is doubtful that everyone will get what they want or believe they’re entitled to.  Money can do some nasty things inside of a family dynamic . . . and, if intentions are not clearly spelled out ahead of time, these kinds of issues can, indeed, ensue.

So, periodically, it is always a good idea to pull out your legal documents so that they can be reviewed to make certain that they still reflect your current wishes and desires.  And trust us, it is really not all that unusual to amend them from time to time as your circumstances change.

Dianne Feinstein and her late husband, Richard Blum, certainly had the financial means to be able to hire the most competent legal help to draft these important documents, but, for whatever reason, they still left “holes” in their estate plan that have culminated in the kind of inter-family bickering that, unfortunately, could have been avoided.

Please don’t let this happen with your estate plan!

Finally, as always, if you’re not sure if everything you’ve done for your own estate plan has been set up properly, and you’d like us to review your current important legal documents, this is a complementary service that we routinely provide for our clients and their family members . . . so, don’t be afraid to ask!

                                          Ray & Renee