While the final Tom Clancy estate battle may not have been as exciting as the climactic scenes in The Hunt for Red October or Patriot Games, the struggle between author Tom Clancy’s widow and four adult children over his $86 million estate is now over. The seven justices on the Maryland Court of Appeals (the highest court in Maryland) were asked to rule about what a key clause in the codicil to Clancy’s will actually meant. While it was close — four votes to three — the ruling marked a decisive victory for Clancy’s widow.
Considering that Tom Clancy is one of the best-selling authors of all time, it is ironic that the fight boiled down to how to interpret a clause in his estate planning documents that was written in an unclear manner.
The dispute centered around a provision in Clancy’s second codicil (which means amendment) to his will. The will, originally signed in 2007, divided Clancy’s assets into three trusts: one-third for his wife, another third for his wife to use while she was alive and then onto his daughter from that marriage, and the last one-third to be split between his four adult children from a prior marriage. You can read more details about his estate and how the dispute started in our prior article, Tom Clancy Estate In Family Fight Due To Poor Estate Planning.
Just weeks before he died at 66 from heart failure, Clancy signed the codicil, which included this key sentence: “No asset or proceeds of any assets shall be included in the Marital Share of the Non-Exempt Family Residuary Trust as to which a marital deduction would not be allowed if included.”
Does this language seem a bit unclear to you? If so, you’re not alone. The seven justices of Maryland’s highest court were closely divided about what this language meant. The four who ruled in favor of Clancy’s widow believed that this clause meant that all estate taxes from Tom Clancy’s Estate would have to be paid by the children’s trust, not the trusts containing her money, because that was the only way to fully protect the martial deduction to federal estate tax laws.
The other three justices sided with the children. They agreed that this clause was meant to protect the marital estate tax deduction yet felt it was not meant to alter another provision in Clancy’s will that stated that the tax bill was to be paid equally from two of the trusts, not from the children’s trust alone. In other words, they felt that the children should only pay one-half the tax bill, not all of it, and this clause did not alter the outcome. These justices felt that Tom Clancy wanted to protect the marital deduction but not to increase it at the expense of what his children would inherit.
Interestingly, the lawyer who drafted this codicil initially acted as executor of Tom Clancy’s estate, and he sided with the children. This certainly suggests that the language was intended to apply as the children contended, but the law turns not on what was intended, but on what the documents actually say.
What does all this mean for Tom Clancy’s heirs? The four children now have to pay an estate tax bill to the IRS of almost $12 million. If they had won, the total tax bill would have been closer to $16 million, but they would have split it with one of the trusts set up for Clancy’s widow. So they lost $8 million, and the IRS lost out on about $4 million.
That’s a lot of money in play over one awkward sentence. Ahh rich people, problems, right? Not so fast.
Clancy built his fortune on weaving words into compelling stories. But with one unclear clause in his estate planning documents — a clause that the drafting lawyer felt said something different than what the Court of Appeals ruled — Clancy’s heirs were forced to battle in court for two years, with millions of dollars on the line. And it all would have been avoided if the language was clear.
Here’s the lesson for all of us (millionaires and non-millionaires alike): What you intend your will or trust documents to say does not matter if they are written differently than what you meant. The wording of the documents, not what you tell your estate planning attorney, is the only thing that matters.
Battles like this do happen on a regular basis across our country. While millions of dollars of estate taxes aren’t usually on the line, it’s very common for poorly-drafted wills and trusts to lead to long, expensive battles among heirs who read the same language in different ways.
So how do you insure that your wishes are followed and prevent a fight like this happening to your heirs? First, work with an experienced estate planning attorney. Attorneys who specialize in estate planning are far less likely to prepare a confusing or contradictory document that those who don’t. This doesn’t mean that mistakes cannot happen, even by the best attorneys, but the chances are greatly reduced. Not all lawyers are the same, just like not all doctors are. It’s far better to work with an estate planning specialist who comes with a strong recommendation.
Second, read your documents carefully before you sign them. Ask questions of your attorney; make sure you understand what everything means. If you have any doubts, you can always have a trusted professional or another attorney give you a second opinion. Taking the time to be careful and thorough is always a good idea, when it comes to estate planning.
If a fortune fight can happen to the estate of a man who made tens of millions of dollars through his words, it can happen to you too! Take your estate planning seriously and hire the best attorney you can … and even then read the documents carefully to make sure they say what you really intend.
Danielle and Andy Mayoras are co-authors of Trial & Heirs: Famous Fortune Fights! and attorneys with the Michigan law firm, Barron, Rosenberg, Mayoras & Mayoras, P.C. Click here to subscribe to their e-newsletter, The Trial & Heirs Update and learn more about their book. You can reach them at [email protected]