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This page contains a single entry by Associate Editor - 3 published on May 31, 2011 4:14 PM.

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Estate Analyst: Evil Estates Deconstructed


Evil Estates Deconstructed 
The Search for Osama bin Laden's Wealth

God judged it better 
to bring good out of evil 
than to suffer no evil 
to exist. 

--Saint Augustine 

There is evil among us. Monsters walk the face of this earth. 

How does a nation of laws deal with the estate of a monster? What laws would restrict evil persons from profiting from their wrongful acts? Can civil claims be brought against a murderer's estate? What burden of proof would apply? 

And when good prevails over evil during life, will that triumph also govern the estates of evildoers? Specifically, can the estates and descendants of victims recover damages against someone such as Osama bin Laden?

Here we review the estates of several notorious persons. 

Crime Must Not Pay

Common law rules do not allow murderers to profit from their crimes. Generally, murderers are not permitted to inherit assets from the estate of his or her victim. This nearly universal rule has been modified with variations in "slayer statutes" that have been enacted in most states. 

Slayer statutes trace some of their roots back to Riggs v. Palmer, 115 N.Y. 506 (1889). In that case, Elmer Palmer, knowing that he was named as the principal beneficiary in his grandfather's Will, poisoned his grandfather to prevent the Will from ever being changed. The Will was probated in 1880. In 1889, the Court of Appeals of New York, citing tenets of universal law and maxims, sided with plaintiffs in blocking assets from reaching Elmer Palmer. New York was then motivated to enact legislation on point.

In Plumley v. Bledsoe (2005), the Supreme Court of Alabama noted that every state now has a slayer statute. Actually, a law review article from that same year identified 42 states with slayer statutes. It noted that only 11 states closely follow the Uniform Probate Code approach. The remaining states have a common law slayer's rule. See, Pehush, Maryland is Dying for a Slayer Statute: The Ineffectiveness of the Common Law Slayer Rule in Maryland, 35 U. Balt. L. Rev. 271 (2005).

Slayer statutes and rules typically prevent a slayer from inheriting property, obtaining life insurance proceeds, or obtaining property through survivorship for joint ownership where a slayer could obtain assets by intentionally causing the death of another person. 

Generally, slayer statutes treat the slayer as having predeceased the decedent/victim. However, Maryland, which applies a common law slayer's rule that has not been modified by statute, has a harsher approach that also prevents assets that would have gone to the murderer from passing through the murderer's estate at all. 

For example, Grant has two children, Penny and Nicole; his Will leaves his estate to them in equal parts. Nicole has a daughter, Nell. If Nicole were to murder Grant, then she wouldn't be able to inherit Grant's estate under the slayer statutes of every state. In most states, Nicole would be treated as though she predeceased Grant, and Nell would inherit Nicole's share of the estate. However, under Maryland's slayer rule, Nell would be barred from inheriting from Grant's estate, as well, and all of Grant's assets would pass to Penny. 

Gray Areas: It is difficult to perfectly design statutes to implement social policies. Obviously, the slayer statute discourages someone from committing a murder for the purpose of inheriting, and the Maryland rule also discourages that person from murdering someone in circumstances where it would benefit the murderer's own children. 

But what if there is a murder that is a crime of passion and involves no premeditation? Or what if there is a loss of life due to reckless homicide or manslaughter? What if there is an assisted suicide of an elderly parent? 

What if the murder is not proven by the state in a criminal action, but plaintiffs prevail in a civil wrongful death action? What if the murderer dies before any court has ruled on culpability? There are many gray areas of life and death that slayer statutes can't fully cover. 

Modern Estates: The very premise of a slayer statute may be missing the mark in the way that estate planning has evolved. At least two generations of estate planning have directed assets toward trust arrangements--originally to avoid probate and, for the past 20 years, for asset protection.  

Asset succession in businesses through family limited partnerships is designed to freeze values for estate tax purposes. Business assets are transferred prior to death and before they appreciate in value.

Dynasty trusts designed to protect assets for multiple generations and reduce transfer taxation also remove assets from the conventional parent-to-child pattern. 

Medicaid planning has accelerated lifetime transfers to avoid the five-year look-back rules. 

Divorces have redistributed wealth in many families long before spouses have died.
Although recent analysis concludes that baby boomers are set to inherit $11.6 trillion from their parents, any evil offspring bent on accelerating the process via parricide had better check to see if their parents have any equity left in their home, funds left in their pension, or even loose change in a piggy bank. The median distribution to any given boomer is only $64,000. These days, not every parent has much of that $11.6 trillion in their estate.

In any event, slayer statutes in many states are based on old-fashioned presumptions of a victim's wealth remaining in a concentrated lump awaiting probate when modern estates are atypical and disbursed in a variety of lifetime transfers and non-probate arrangements that are all over the map. 

All that is necessary for the triumph of evil
 is for good men to do nothing. 
--Edmund Burke 

Son of Sam Statutes
The case of serial killer David Berkowitz exposed another critical gap that slayer statutes had not anticipated. 

Berkowitz, also known as the "Son of Sam," killed at least six people in the 1970s. After being convicted of the murders, it was rumored that Berkowitz was being offered large sums of money to write a book. New York quickly adopted a "Son of Sam" statute. This law was later invoked against Mark David Chapman, who murdered John Lennon. 

Nearly every state followed New York's example. In 1991, Simon & Schuster, Inc., sued to prevent the law from being applied to Wiseguy, a book about Henry Hill that was used as the basis for the film Goodfellas.

The U.S. Supreme Court struck down New York's statute based on constitutional protections of free speech but provided guidelines for how such a law could be upheld. The Court concluded that the New York law was overly broad and could apply to works such as Henry David Thoreau's Civil Disobedience or The Confessions of St. Augustine.

"That the Son of Sam law can produce such an outcome indicates that the statute is, to say the least, not narrowly tailored to achieve the State's objective of compensating crime victims from the profits of crime," wrote Justice O'Connor.

New York and several other states then revised their respective Son of Sam laws. There are now about 40 states that have Son of Sam-type statutes. (A recap of states with Son of Sam statutes can be found at www.freedomforum. org/packages/first/ SonOfSam/index.htm.)
Epilogue: In 1987, Berkowitz became a born-again Christian. In 2005, Berkowitz sued his former attorney for using letters and trial materials to publish a book. Berkowitz demanded that profits of the book be given to the families of his victims. Berkowitz himself is currently writing Son of Hope, with all proceeds to go to the families of his victims. He announced that he is not seeking parole because he feels he deserves to remain in prison. Berkowitz is up for parole for the sixth time in 2012.

Grim Collectibles

Albert DeSalvo, aka "the Boston Strangler," tried to market "choker" necklaces made in prison and offered to record a tune called "Strangler in the Night." This approach was a rarity in 1965. Today, even the most repugnant of things is expressed and then sold on eBay. Websites market calendars and trading cards featuring serial killers. One company sells action figures of Jeffrey Dahmer and Ted Bundy. There is even a term for this niche of merchandise: murderabilia.

In recent years, there have been auctions of paintings by serial killer John Wayne Gacy and possessions owned by "Unabomber" Ted Kaczynski. 

Gacy took up painting while on death row and produced hundreds of works, including portraits of Elvis, Charles Manson, and himself as "Pogo the Clown." He reportedly made more than $100,000. His works have been exhibited since 1980 and continued after his execution in 1994.  Families of Gacy's victims also organized a bonfire to destroy 300 of the paintings.  

In Kaczynski's case, the U.S. Marshals office decided to auction off 60 lots of items seized from the Montana cabin in 1996. 
Sales of these items were supposed to raise funds for various victims. However, certain victims have objected to this type of notoriety. While laws may prevent wrongdoers from financial profits that they could never enjoy in prison anyway, killers are rewarded with celebrity and infamy instead.
Another profound issue was articulated by writer Mary Elizabeth Williams:
"[W]hile there is a strange justice in victims' receiving the spoils of a terrible man's estate, it opens up a moral can of worms about why anything that has been in the hands of someone who killed and raped and mutilated his fellow human beings would be welcome in someone else's home, or hanging on someone's wall." 

Civil Liability

In 1995, O.J. Simpson was acquitted of murder in a criminal trial. Two years later, he was unanimously convicted by a jury in a civil trial for wrongful death and was ordered to pay $33.5 million in compensatory and punitive damages. To date, very little of the damage awards have been paid. 

Estates and surviving families of crime victims may take heart from the success of a civil claim that is based on a "clear and convincing" or "preponderance of the evidence" burden of proof, as opposed to the "beyond a reasonable doubt" standard that applies in criminal proceedings.

Nevertheless, aggrieved victims face the reality of effective asset protection techniques. The Goldman and Simpson families have recovered very little of the damage award. Most of O.J. Simpson's wealth is in retirement plans that are protected under ERISA and that remain protected after distribution under Florida law. It has been speculated that other assets are hidden in offshore accounts. These would likely be in jurisdictions that do not recognize American judgments. Even if they did, the transfers would likely be controlled by offshore trusts, outside of O.J. Simpson's direct control. 

Collection is also impeded by other obstacles. The statute of limitations to challenge transfers to these offshore trusts expires after two years, making it difficult for claimants who do not engage in immediate pursuit. Information about assets transferred by O.J. Simpson's lawyers would be protected by attorney-client privilege. And judgments can also expire. The California judgments against O.J. expire after 10 years and can be renewed twice.

The Goldmans were eventually able to claim O.J. Simpson's Brentwood mansion because it was one of his nonexempt assets. However, it is likely that an "equity stripping" technique was applied so that the maximum level of mortgages and loans were taken against the property's value.

Posthumous Liability 

Death will not fully protect the estate of a wrongdoer from posthumous legal actions, but it does complicate matters. For example, in 2004 Kenneth Lay was indicted by a grand jury for securities fraud in the collapse of Enron. 

Many Enron investors and employees lost their life savings. Lay was convicted in a criminal action in 2006 and he faced jail time of up to 30 years in jail, fines, and civil suits. Then, before he could be sentenced or appeal, Lay died of a heart attack. The federal court was forced to vacate the judgment. The government did not get the $43.5 million it sought from Lay. 

As a result, civil claimants against Lay were not able to use the criminal conviction, but they also had a lighter burden of proof. In addition, because Lay is deceased, civil claimants can pursue only compensatory damages and will likely be barred from obtaining punitive damages from his estate. In an ironic twist, when the government was blocked from pursuing its criminal action, it also filed a civil action. Thus, individual claimants are competing with the government to share any assets recovered from the estate.  

Lay claimed to have a negative net worth (-$250,000) at the time of trial, but his widow may have more than $12 million in assets. With so much time passing, it would be surprising if those assets were not largely protected by the time the civil actions conclude.

Osama bin Laden

After America was attacked on September 11, 2001, the search for Osama bin Laden took nearly a decade. The search for bin Laden's assets may take a lot longer. In fact, most of his assets will never be seized or even identified, for numerous reasons. 

To begin with, information about bin Laden's wealth is highly speculative. His father was a billionaire in the construction industry, but, with 53 children, it is not clear how his assets were distributed. Bin Laden was cut off and disavowed by his family at some point. The Saudi government revoked Bin Laden's citizenship in 1994 and required the family to find a buyer for Bin Laden's shares in his father's company. Nevertheless, there are reports that he bin Laden inherited $20 to $30 million. (Other reports place that amount at $200 to $300 million.) 

Bin Laden may have had the skills to parlay his inheritance into a much larger fortune. He graduated from King Abdulaziz University in Saudi Arabia, where he studied economics and business administration. Prior to terrorism, bin Laden had a wide range of conventional business success. He started a construction company, an investment company, and a bank. Ultimately, he wealth was used to establish legitimate enterprises that financed Al-Qaida. His empire was running everything from shrimp boats in Kenya, to forest projects in Turkey, to diamond trading in Africa. 

As a terrorist with a covert network around the world, Bin Laden's assets are extremely well concealed. Instead of being transferred from bank accounts, cash is carried by couriers, making it untraceable by any paper trail, or conveyed through a "hawala" system involving brokers, which is also highly secretive. Other funds reside in business accounts and can be wired in transactions that take mere seconds. 

Nevertheless, President Bush issued an executive order on September 24, 2001, to freeze bin Laden's assets, and other nations have followed suit. It is unlikely that Bin Laden owned life insurance, but if a policy existed, those assets might be seized. Of course, it would have to be proven that bin Laden is dead, and the circumstances of his death and immediate burial at sea are not conventional, to say the least.

Although bin Laden reportedly left a "Will" when he anticipated being captured in 2001, it would be highly surprising if any funds ended up being administered in a formal "probate" manner that is supervised by courts and authorities. 

A formal trust fund would be a surprisingly mainstream method for a notorious terrorist to use. On the other hand, he had five or six wives and between 20 and 26 children, so a bin Laden family trust with a discreet name, professional trustees, and an account in the Cayman Islands might have been an effective approach that became operational while the grantor was in hiding for the past decade.  

Even if bin Laden's assets are discovered and seized by the United States, there would still be some significant issues to sort out. For instance, despite the fact that bin Laden and Al-Qaida have claimed responsibility for terrorist attacks, culpability has not yet been adjudicated in a court. It may be a minor technicality under the circumstances, but no aspect of a claim can be taken for granted. Since bin Laden is now deceased, only civil proceedings would remain viable.

Dividing bin Laden's assets among thousands of victims across many jurisdictions would be a complex and unwieldy process as well. By some estimates, bin Laden cost the United States several trillion dollars (including the military costs for efforts in Afghanistan and Iraq). However, the need for justice and closure may one day result in a symbolic proceeding against the estate of Osama bin Laden. 

What is objectionable, what is dangerous,
 about extremists is not that they are extreme, 
but that they are intolerant. 
The evil is not what they say about 
their cause, but what they say 
about their opponents. 

--Robert Kennedy