OK, I admit it. Back in the day I read all the Tom Clancy novels – The Hunt for Red October, Red Storm Rising, Patriot Games, Clear and Present Danger, The Sum of All Fears – and saw all the movies (and yes, I read the books before I watched the movies). How else would I have learned about Russian MiG 29s, U.S. F-14 Tomcats, CENTCOM, and PACOM? But while Mr. Clancy’s stories were full of international espionage and meticulously detailed military information, unfortunately his last will and testament and particularly his second codicil, drafted by a Baltimore estate planning attorney, lacked the precision of his own writing.
Mr. Clancy died from heart failure on October 1, 2013, at the age of 66. He left behind his wife, Alexandra Clancy, a young daughter, and four adult children from his first marriage.
Mr. Clancy’s will and two codicils were filed for probate in Baltimore City, Maryland, on October 10, 2013. The probate docket indicates that the author signed his 21-page will on June 11, 2007, and two short codicils totaling a mere three pages on September 18, 2007 and July 25, 2013.
According to a partial estate inventory filed in January 2014 and a supplemental inventory filed in September 2014, Mr. Clancy’s estate is estimated to be worth $83 million. His largest asset was a 12% ownership interest in MLB’s Baltimore Orioles, estimated to be worth $65 million; he also had multiple real estate holdings (including a $7 million estate overlooking the Chesapeake Bay which went to his wife through joint ownership), $10 million in business interests, and, while it may seem odd it’s certainly not unexpected, a rare, operating World War II tank.
While several of the real estate holdings passed to Mr. Clancy’s wife through joint ownership with rights of survivorship (along with other jointly held investments which are not part of the probate estate), Mr. Clancy’s intent for the remainder of his property was for it to be divided among three distinct trust “buckets”:
- One-third in a marital trust for the benefit of his wife;
- One-third in a family trust for the benefit of his wife and all his children; and,
- The balance in trusts for the benefit of his four adult children as well as grandchildren.
This sounds like a reasonable plan for the author’s blended family, doesn’t it?
But lurking in this type of plan for a blended family and a substantial $83 million estate is the impact of estate taxes – both federal and Maryland (when Mr. Clancy died, the federal estate tax exemption was $5.25 million and the Maryland estate tax exemption was a measly $1 million). The total estate tax bill is estimated to be $16 million, and the Personal Representative of the estate, Baltimore estate planning attorney J.W. Webb (who drafted the July 2013 codicil – more on that below), has taken the position that trust bucket #2 (the family trust) should pay $6 million of the tax bill and trust bucket #3 (the children’s trusts) should pay $10 million of the tax bill (note that trust bucket #1, the marital trust, is designed to defer payment of estate taxes on its value until after Alexandra Clancy’s death). But according to the “Petition for Declaratory Judgment, Construction of Will, and Removal of Personal Representative” filed in early September by Alexandra Clancy’s attorneys, the widow believes that the intent of the July 2013 codicil was to confirm that trust bucket #3 – the trusts for the benefit of Mr. Clancy’s four children from his first marriage – should pay the entire $16 million estate tax bill, thereby leaving trust bucket #2 completely intact. Mr. Webb has so far declined to comment on the petition and has until October 17 to file his response.
International intrigue? Not even close, just a typical day in probate court, and yet another example of celebrity estate planning gone wrong. In addition to the questionable language in the July 2013 codicil, had Mr. Clancy created and funded a revocable living trust instead of relying on a will and some codicils as the governing documents of his estate plan, then the intimate details of the writer’s final wishes would have remained a private family matter. In fact, this surprised me since 10 years ago I practiced as an estate planning attorney in Bethesda, Maryland, and my firm was (and still is) a firm believer in revocable living trusts. And since this was (and still is) the case for other Maryland estate planning firms, why an estate planning attorney with a big Baltimore firm would use a will instead of a trust is beyond me.
Aside from this, the Clancy estate battle also demonstrates how tricky it is to plan for a blended family. What was the author’s true intent? Unfortunately we will never know, and after significant time and money have been spent, a probate judge will end up making the final decision.