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Disney Family Feud | The Tragic Legacy

Disney Estate Litigation.jpgWalt Disney is one of the most celebrated and successful entrepreneurs of the 20th Century and a man whose vision continues to delight families around the world through his Disney theme parks and movies. Disney himself was a scrappy and colorful animator, film producer, voice actor, and corporate leader who may have become more celebrated and appreciated since his death in 1966 than he was while he was alive.

Despite many setbacks during his career and big gambles on films and theme parks that could easily have gone the wrong way, Disney managed to leave behind a significant fortune, mostly in the form of Walt Disney company stock which some have estimated was worth $100 Million when he died.

Unfortunately for several of Disney's grandchildren, that inheritance has become a family curse instead of a blessing.

Diane was married once and had seven children, all of whom are still alive, and none of whom entered the family business.

Sharon was married twice and had three children, Victoria, and twins, Brad and Michelle. Before she died in 1993, Sharon set up a trust fund worth $400 million in Disney stock for her three children which stipulated that they were to receive distributions every five years beginning at age 35. Sharon's trust had one major condition, which was that the trustees were directed to withhold distributions if the children did not show "maturity and financial ability to manage and utilize such funds in a prudent and responsible manner."

Despite a life of privilege, or maybe because of it, all of Sharon's children grew up dealing with capacity and mental health issues. Michelle suffered a brain aneurysm in 2009 and had a history of drug addiction. Brad reportedly had a "chronic cognitive disability" which the trustees said indicated he lacked the mental ability to manage his financial affairs. Victoria was never able to get her life together; she became an alcoholic and heroin addict who received $20 million from her trust fund at the age of 35. She died a year later in 2001 from liver failure.

In order to save the twins, Brad and Michelle, from similar self-destructive behavior, the trustees of Sharon's trust have had to make the difficult decision of whether to withhold their shares. Despite her history of problems, Michelle's shares were ultimately given to her, but not without wrangling in court.

Brad, however, has not done as well. To date, the trustees have withheld both his 35th year and 40th-year payments and are expected to continue withholding his 45th-year payment. Brad has responded by filing suit against the trustees in Los Angeles Superior Court, a battle which spilled over into a long-standing dispute with his twin sister. As the lawsuits have piled up, Brad and Michelle have each questioned the other's mental competence.

To make matters more difficult, Brad's father, Bill, re-married several times after he divorced Sharon. Bill's fifth wife, Sherry Lund, Brad's stepmother, entered the legal fray by trying to establish a conservatorship over Michelle, and then later by trying to adopt Brad, perhaps as a first step towards him bequeathing his inheritance to a stepsister. So far, those legal maneuvers haven't worked.

As I've seen countless times in my law practice, inheritance plans often go awry because of unforeseen circumstances. Of course, it is impossible to anticipate what will happen to children and grandchildren and whether they will be surrounded by good or bad influences. But in this case, with 20-20 hindsight, it might have helped avoid future conflict if Sharon Disney had been a little more specific when it came to defining terms like maturity, prudence, and responsibility. Perhaps that's a lesson other well-intentioned trust makers may be able to learn from this case.

Before you go, please let me know if you'd like to receive a free copy of my book, The Wolf at the Door. Just send your address in an email to me at [email protected], and I'll be glad to put one in the mail.

Disney Family Feud | The Tragic Legacy from Hackard Law on Vimeo.

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