More on Simon estate

Daughter of billionaire Mel Simon contests will
Associated Press
January 9, 2010
thestarpress.com
http://content.usatoday.net/dist/custom/gci/InsidePage.aspx?cId=thestarpress&sParam=32491157.story
NOBLESVILLE, Ind. (AP) — A daughter of billionaire shopping mall magnate Melvin Simon claims her late father was coerced into approving a new estate plan that increased the amount of his fortune going to her stepmother by hundreds of millions of dollars.

Deborah Simon filed a will contest Thursday in Hamilton County Superior Court. She claims her father couldn’t sign a new agreement himself.

“In fact, Melvin was so ill that he was unable to sign either his new will or trust agreement himself, necessitating someone to hold a pen in Melvin’s hand and move his hand as he allegedly “signed’ both documents,” the complaint reads.

Mel Simon was the founder of Simon Property Group Inc. and the Indiana Pacers co-owner. He died Sept. 16 at age 82.

The filing was first reported by the Indianapolis Business Journal.

Mel Simon had been married to Bren, his second wife, since 1972. Deborah Simon is one of Mel’s children from his first marriage.

A message seeking comment left Saturday with Bren Simon’s lawyer was not immediately returned.

Mel Simon’s philanthropy included $50 million for Indiana University’s cancer center and $10 million to the Indianapolis Museum of Art, along with support for other health care and arts-related projects.

Simon, who was the son of a Bronx tailor, arrived in Indianapolis in the 1950s while in the Army and entered the commercial real estate business in the city after his discharge.

The business he started in 1960 as Melvin Simon & Associates grew into the country’s largest shopping mall company, with ownership interest in more than 300 properties in the United States, Europe and Japan.

Forbes magazine estimated Simon’s fortune last year at $1.3 billion.

Simon family fight breaks out over billionaire’s fortune
Greg Andrews
January 8, 2010
Indianapolis Business Journal
http://www.ibj.com/simon-family-fight-breaks-out-over-billionaires-fortune/PARAMS/article/15654
Melvin Simon’s daughter Deborah filed court papers Thursday afternoon charging her father was coerced into approving a new estate plan in February 2009 that dramatically increased the amount of his fortune going to her stepmother, Bren.

The will contest, filed in Hamilton County Superior Court, alleges that “Melvin was so ill that he was unable to sign either the new will or trust agreement himself, necessitating someone to hold a pen in Melvin’s hand and move his hand as he allegedly ‘signed’ both documents.”

Melvin Simon, co-founder of Simon Property Group, died Sept. 16 at age 82. He had pancreatic cancer and, according to court papers, was suffering from dementia and neurological disorders “that impaired his language, reading, writing, cognition, memory and understanding.”

Simon was one of Indiana’s richest men. Forbes magazine in March 2009 estimated his net worth at $1.3 billion. Shares of Simon Property, his principal holding, have zoomed higher since, perhaps pushing the value of his fortune past $2 billion.

Melvin had been married to Bren, his second wife, since 1972. Deborah Simon is one of Melvin’s children from his first marriage. The other surviving children are Cynthia Simon Skjodt and David Simon, the chairman and CEO of Simon Property Group. Melvin also adopted Tamme, Bren’s daughter from her first marriage.

Deborah’s legal filings say the new estate plan provided hundreds of millions of dollars more to Bren than Melvin previously had intended and effectively wiped out the share that was to have gone to the children of his first wife, Bess.

The court filings charge Bren manipulated her husband for her own financial benefit and that her “unlawful” actions were facilitated by a team of professionals. Those included Krieg DeVault partner Eric Manterfield, who represented Bren as executor of the estate, and Bruce Jacobson, an accountant who was a longtime financial adviser to Melvin and Bren.

Manterfield declined to comment. Jacobson and a Baltimore attorney representing Bren did not immediately respond to messages Friday afternoon.

According to the filings, prior to last February’s changes, Melvin’s estate plan divided assets into these three equal portions:

— One-third going directly to Bren.

— One-third placed in a trust, with Bren receiving all its income during her lifetime. After her death, the principal would pass to Melvin’s four children.

— One-third going to charitable trusts that were to donate tens of millions of dollars a year to local and national charities. Anything remaining after a predetermined period would go to Melvin’s children.

Under the new estate plan, Bren would receive one-half of the estate outright, and the other half would go into a trust, with Bren receiving all its income during her lifetime. Court papers say changes to Melvin’s estate plan created inconsistencies and conflicts that make it unclear what would happen to the principal after her death.

But court papers say that even if the principal ultimately goes to charities, that likely won’t happen for a long time—a delay that seems in conflict with the wishes of a man who gave away more than $150 million during his lifetime. The filing notes that actuarial tables indicate Bren, now 66, is likely to live another 20 years.

Trusts filed with the court show that prior to the changes to Melvin’s estate plan, local charitable, religious and educational organizations had been in for a windfall. One filing shows Simon earmarked $10 million for the Jewish Federation of Greater Indianapolis, $2 million for Congregation Beth-El Zedeck, $2 million for the Indiana University Foundation and $1 million each for Butler University, the United Way of Central Indiana and The Children’s Museum of Indianapolis.

Court papers charge the changes occurred in whirlwind fashion that would have been inappropriate even if Melvin hadn’t been ill.

In early February, court papers say, Baltimore attorney Marianne Schmitt Hellauer, who is representing Bren as executor, held an initial meeting with Melvin at his Indiana home. The filing says that at the gathering Hellauer patched in Manterfield by speaker phone and told him how Melvin’s estate plan was to be changed.

Court papers say Manterfield apparently did not talk with Melvin about the changes during that call. And, in the week between that meeting and the execution of the documents Feb. 13, Manterfield did not provide Melvin any materials explaining or summarizing the changes, Deborah alleges in her complaint.

At the Feb. 13 meeting, her attorneys charge, “Melvin was unable to hold the pen and sign his name, and Jacobson held and moved Melvin’s hand as Melvin allegedly signed the altered will and trust.”

The complaint says the Simon children were told about the new will at a meeting Oct. 13, nearly a month after Melvin died.

The filings say no parties involved in the revisions made a video or audio recording of the process.

Indianapolis law firm Ice Miller is representing Deborah Simon. An attorney for the firm declined to comment.

Read the Simon Complaint.

Widow likely biggest beneficiary of Simon’s estate
Peter Schnitzler
September 26, 2009
Indianpolis Business Journal
http://www.ibj.com/plan-for-fortune-under-wraps/PARAMS/article/7262
Bren Simon likely will inherit at least one-third of her billionaire husband’s fortune and potentially much more, wealth managers speculate, based on the legal and tax issues involved in such a large estate.

In March, Forbes magazine listed Melvin Simon as the world’s 559th-richest man, with net worth of $1.3 billion. That’s clearly a low-ball estimate now, thanks to the resurgence in the stock price of Simon Property Group Inc., his principal holding. It’s more than doubled in the past six months, adding more than $700 million to his wealth.

Simon family members won’t publicly discuss the estate plan for Simon, who was suffering from pancreatic cancer and died Sept. 16 at age 82. But public records suggest the mall pioneer carefully began laying the groundwork for passing on his wealth years ago, with an eye toward minimizing taxes—the nemesis of the rich.

Without the elaborate use of tax shelters, such as trusts and charitable bequests, estate taxes would soak up half of Melvin Simon’s fortune. Public records show he began setting up trusts as long ago as the late 1970s.

Simon holds about a 7-percent stake in Simon Property Group, the shopping center developer he co-founded in 1960, and he was the co-owner of the Indiana Pacers before quietly working out a deal with his brother Herb in the past year that gave him full ownership. Melvin also owns Asherwood, an elaborate Carmel mansion with its own golf course that has an estimated value topping $50 million, as well as a Palm Beach, Fla., house valued at $20 million.

IBJ reported last year that he and Bren were laying the groundwork to donate Asherwood to the Indiana University Foundation, potentially to house a new think tank. But no deal materialized.

The super-rich often give generously in their later years, in part because the alternative is a bigger tax bill at death.

Federal estate taxes quickly soar up to 45 percent after a $3.5 million exemption. Add in Indiana’s estate tax and the pain is worse.

“You can’t keep all of it when you die. But you can certainly give it away. The more you give away, the lower your tax bill,” said Chap Mitzell, managing principal of locally based wealth management firm The Windsor Group Ltd. “You end up redistributing your wealth in the way you want to, rather than the way the U.S. government wants to.”

No Simon family members responded to IBJ’s requests for comment, and little information is available publicly about Melvin’s estate plan.

Documents expected to be filed soon in probate court in Hamilton County probably won’t illuminate the situation. They likely will specify that assets be distributed as specified under various trusts, but those trusts are not public record.

The rich often can keep such information private unless heirs challenge the plan—arguing, for instance, that changes in the distribution unfavorable to them occurred when the deceased was of unsound mind.

More zeroes

Financial planners say the issues Melvin Simon was grappling with are similar to those any wealthy person would face—only with more zeroes.

“You won’t really know what happened here,” said John Wortman, co-founder of locally based Valeo Financial Advisors LLC. “Which is part of good planning. Done well, it’s done in private.”

Simon’s immediate family include his wife, Bren, 66, whom he married in 1972; three children from his first marriage, David, Deborah and Cindy; and Tamme, a stepdaughter. If Simon wanted to avoid estate taxes entirely, his first option would have been to leave everything to Bren. There are no taxes on the transfer of estates between spouses.

But experts agree that strategy would simply have kicked the can down the road, merely delaying the inevitable tax reckoning until Bren passes away. It’s far more likely that Simon established a meticulous estate plan that includes sizable bequests to his children and close friends, with a hefty proportion set aside for charity.

Bren Simon will be the biggest beneficiary in almost every scenario. She stands to inherit—at minimum—one-third of her husband’s net worth and a quarter of his properties, according to Indiana law, because she was his second wife.

And in a legal contest, some experts say she’d be treated as a first wife, entitled to half her spouse’s estate, since the couple was married 37 years.

“Disagreements can result in lots of litigation. Assuming things were amicable and planned, that can be avoided,” said Diane Sargeant, co-founder of locally based law firm Cox Sargeant and Burns PC, a certified estate planning and administration specialist.

“My guess is, knowing Mr. Simon’s careful approach to business matters and his philanthropic approach, this was all effectively dealt with before he passed on.”

1977 trust

One of the few public records that sheds light on his financial planning is The Melvin Simon Trust No. 7, established in 1977 for the benefit of his stepdaughter Tamme, who’s now 49. It provided her quarterly income from an unspecified amount of principal until her 45th birthday. Katz Sapper and Miller LLP co-founder Irwin Katz, a close friend of Melvin’s, was trustee.

Simon surely arranged similar vehicles for his other children, said Ken Klabunde, vice president of City Securities’ Wealth Advisors division.

“I would expect somebody in this [wealth] category to have begun setting stuff up decades ago,” he said. “And for it to have been revised probably every five years as tax law changed, as new techniques came out, and as kids grew up.”

The plan also likely earmarks money for local charitable organizations, many of which already have collected large sums. During his lifetime, Simon gave away more than $150 million, and gifts in recent years have been especially large.

A $50 million gift to Indiana University in 2006 established the Melvin and Bren Simon Cancer Center, for example. In 2007, the couple gave $10 million to the Indianapolis Museum of Art to endow its director and CEO.

Internal Revenue Service records show philanthropic foundations tied to Simon have assets topping $60 million.

Rob MacPherson, the Central Indiana Community Foundation’s vice president for development, said the causes he supported regularly are most likely to be included among his final bequests.

“I hope the people talking to him were saying, ‘This is your legacy, Mel. People will remember you for a lot of things, but this will be an expression of your belief in humanity and the principles by which you lived your life.’”

Financial planners say Simon also may have set up more complicated vehicles that achieve the dual purpose of supporting causes he believed in and providing money to his heirs.

For example, in a charitable lead trust, a not-for-profit gets a gift of stock or real estate and receives its interest. But after several decades, the asset itself remits tax free back to the grantor’s family.

Jacqueline Kennedy Onassis, among others, made heavy use of such instruments with her estate, pointed out Lorelei Tolson, a director of Carmel-based Oxford Financial Group Ltd. who concentrates on estate planning.

That charitable strategy is about more than tax shelters, she said. It also would allow Simon to steer his children and grandchildren toward personal involvement in the causes he believed in.

“Often times, wealthy clients want to pass along their charitable intentions to the next generation,” Tolson said. “At the end, they get the inheritance. But in the meantime, they learn quite a bit about philanthropy.”