ESTATE PLANNING


Lessons from the Anna Nicole Smith Case

The Supreme Court's unanimous ruling Monday in favor of Anna Nicole Smith's ability to continue fighting for a share of her late husband's vast estate holds some important lessons for average Americans of more modest means.

"If people would just take the time and make the effort to communicate in a legally binding manner what they want, a lot of these issues would never arise," says Martin Shenkman, an estate planning attorney from Teaneck, N.J., who notes that second marriages, particularly those that occur later in life, require special attention. "These lessons are not just for the wealthy," Shenkman adds.

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Smith, a former Playboy model, was 26 when she married 89-year-old Texas billionaire J. Howard Marshall in 1994. He died a year later. She has been fighting one of her late husband's sons in court for more than a decade over a fortune estimated at as much as $1.6 billion.

The Supreme Court justices did not decide how much money Smith would get, if any. Her victory just means that the case is thrown back to a lower court, where she can resume her claim. Smith -- who uses her real name, Vickie Lynn Marshall, in legal papers -- has yet to collect a dime.

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Can a spouse be disinherited?

Although the details of Smith's case are complicated, they raise some interesting issues for average Americans. First of all, how can a spouse be disinherited? In most states, that can't happen. The majority of states give a surviving spouse the right to claim a portion of the deceased spouse's estate-generally one third -- no matter what the will provides. These provisions kick in only if the survivor goes to court and claims the share allowed by law. Otherwise, the will is honored as written.

But in the nine community property states, including Texas where Smith filed her original case, there are different rules about what spouses own and can claim. Basically, each spouse automatically owns half of what either one acquired (except by gift or inheritance) during the marriage, unless the spouses have a written agreement to the contrary.

Smith maintains she is entitled to half of her late husband's estate based on his promise when she married him. But she has no written pre-nuptial agreement, and the bulk of his assets were held in a trust outside of his control, and therefore not available to share with Smith after his death. Smith contends that his son, Pierce Marshall, was instrumental in having his father's trust changed from a revocable to an irrevocable trust after her marriage in 1994.

Pierce, the sole beneficiary of the estate, maintains that his father prepared seven trusts and six wills and none of them named either Smith or his older brother, Howard III, as beneficiaries. So far, he has successfully defended his position.


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