Wealthy businessman’s heirs fight wife over will
Five dispute how philanthropist Mason Rudd’s estate was divided
Andrew Wolfson
February 1, 2010
Louisville Courier-Journal
http://www.courier-journal.com/article/20100201/NEWS01/2010329/Businessman+s+heirs+fight+wife+over+will
Super salesman Mason C. Rudd made millions of dollars from the heavy-equipment company that bore his name and gave millions away as an equally committed philanthropist.

When he died last July at age 90, after a battle with diabetes, Rudd still had a small fortune in stocks, bonds, cash and real estate, including condominiums in Louisville and Florida and a horse farm off Wolf Pen Branch Road.

But now his daughter and four grandchildren say in court documents that after Rudd was “incapacitated” and on the “verge of death,” his “younger second wife” transferred millions of dollars to herself from his accounts and had him recraft his will to her benefit.

As a result, Rudd’s “natural offspring” will get little more than mementos and furniture, according to the will contest they filed Jan. 21 in Jefferson Circuit Court.

According to their lawsuit, Peggy Mudd Rudd, who married Mason Rudd in 1999, when she was 59 and he was 81, stands to collect $3 million in “liquid assets” plus $2 million that she took before Rudd’s death.

“This lawsuit is not about money or condos or farms,” Rudd’s grandson, Mason Miller, a Lexington attorney, said in an interview. “It is about doing what is right, because that is what our grandfather always did with his money. He would expect nothing less of us.”

But Peggy Rudd’s lawyer said the family’s “vitriolic” complaint will fail, because Rudd was competent when he signed his last will on April 16 and friends will vouch that he was lucid in the months before.

Attorney Charles Middleton III said Peggy Rudd had a “warm and loving relationship” with her husband during their nearly 10-year marriage and was entitled to the money transferred to her.

He also said the plaintiffs have greatly exaggerated Rudd’s assets, which Middleton said were severely dissipated by stock market declines and a couple of disastrous investments in the years immediately before his death.

Peggy Rudd declined to comment on the dispute, other than to say of Miller, “Naturally, I disagree with Little Mason.”

Mason Rudd’s longtime lawyer, Grover Potts Jr., called Peggy Rudd “a very nice person” and said it is unfortunate that “she has been cast in this light.”

He said Peggy Rudd, who married her husband two years after the death of his first wife, Mary, did not exercise undue influence over him.

“If you knew Mason,” Potts said, “you know he was always calling the shots.”

Wills tough to overturn

Will contests are rare in Kentucky and extremely difficult to win, probate experts say.

The Kentucky Supreme Court has said that there is a strong presumption that a person who writes a will is competent to sign it and that the degree of mental capacity required is “minimal” — less than that required to make a deed or contract.

The court noted in a 1999 ruling that over the years, it had upheld wills written by people who had been declared partially incompetent and others who believed in “witchcraft and spiritualism.”

University of Louisville law professor James T.R. Jones said judges and juries will look to see if there are “badges of undue influence” that make wills suspicious, Jones said.

“The classic example is if you have a will and move into a nursing home, then suddenly you write another will leaving everything to one of your nurses,” he said.

But the courts recognize that many people don’t write wills until they are old and feeble and that they “should have the right to say what should happen to their stuff,” he said, adding, “You don’t have to be a rocket scientist to write a will.”

And Peggy Rudd’s co-counsel, Gregg Hovious, said: “The Kentucky Supreme Court has never immunized anyone — including a second wife — from garnering assets in bank accounts and changing a will against the interests of her husband or first family, if he is incapable of making such decisions himself.”

Rudd founded Rudd Equipment Co., a construction and mining equipment distributor, which now operates in six states, in 1952.

He was married for 52 years to Mary Rudd and had two children with her, Michael and Elizabeth, known as Betsy.

He met Peggy in 1998, the year after Mary’s death; they both owned condos at 1400 Willow.

Married in 1999

They were married in 1999 “in a secret ceremony without telling his family,” according to the lawsuit, which was filed by Betsy Rudd Bennett and the four grandchildren — Miller; Marianne Nellis, who lives in Israel; and Nathan Rudd and Stephanie Rudd, both of Minneapolis.

The plaintiffs claim that Rudd let friends and family know that he wanted to divide his estate nearly equally between Betsy and Peggy, and in 2007, while he was still healthy, he wrote a will that would have done just that.

Each was to get $1 million. Peggy was to get the Willow condo and another one the couple had bought on Singer Island near Palm Beach, Fla.; Betsy was to get Merrielog Farm.

That will established a trust for the grandchildren and left the half of Rudd’s estate to Peggy, 25 percent to Betsy and 25 percent to the grandchildren. It named Betsy — a lawyer who does pro bono environmental work — as executor.

Michael Rudd, who lives in Napa, Calif., and acquired the equipment company in 1992, was excluded from the will because he’d already been provided for with gifts from his parents and because, as the will puts it, he has “such significant resources of his own.”

The next year, in 2008, Mason Rudd’s health began to crumble, according to the lawsuit. When he tried to give a toast, it says, he repeated the same thing over and over. He had to surrender control of his race horses, and he started to place contradictory bets on the same race, the plaintiffs claim, saying at times he was “virtually catatonic.”

In the spring of 2008, Peggy took total control of his finances, according to the lawsuit. She allegedly then paid herself $250,000 from the sale of property that had belonged to one of Rudd’s companies and embarked on several expensive remodeling projects, explaining, the suit contends, that now that she was personally in charge of Rudd’s money, she was “giving herself a raise.”

In April 2009, when Rudd was barely able to read, according to the plaintiffs, he wrote a new will that removed Betsy as executor and no longer left the farm to her. It also removed the trust for the grandchildren and substituted as executor PNC Bank, one of the biggest clients of Potts’ firm, putting it in line for a substantial fee, according to the lawsuit.

While that will purportedly left $1 million to Betsy — who lives in Louisville and works in Midway — the plaintiffs say “in a practical sense it left her nothing.” Two of the grandchildren were left out of the new will, the suit says.

Plaintiffs’ claim

“Simply stated,” the suit charges, Peggy Rudd, PNC and others “defrauded the estate out of millions of dollars and intentionally interfered with Mr. Rudd’s known wishes concerning the distribution of property at death.”

The suit, filed by Hovious and attorney Lynn Fieldhouse, asks for compensatory and punitive damages against both defendants, alleging that Peggy Rudd breached her fiduciary duty and wrongly interfered with the will and that PNC failed to investigate and was grossly negligent in administering the estate.

Middleton said that there will be no proof of fraud and that the transfers of money to Peggy Rudd were no secret. Fred Solomon, a PNC spokesman, said it doesn’t comment on pending litigation.

Potts, who notarized the later will and met twice beforehand with Mason Rudd to discuss it, said in an interview that he saw no signs that Rudd wasn’t “fully competent.” He also said Peggy Rudd wasn’t present when the will was executed.

In an interview, Mason Miller acknowledged that his grandfather loved Peggy Rudd and that the family accepted her, despite Mason Rudd’s advanced age when they wed.

“We loved him, so we loved her,” he said.

Miller said his grandfather, as chairman of the old Jefferson County Board of Health for 33 years, fought for what was right, whether it was a woman’s right to an abortion or for the county smoking ban. And he said that’s what the family is trying to do now.

“This is what my grandfather would have wanted,” Miller said.

Additional Facts
Executing a will
To validly execute a will in Kentucky, a person must:
• Know the “natural objects” of one’s “bounty,” meaning who would get the assets if the person died with no will.
• Know one’s obligations to those persons.
• Know the “character and value” of one’s estate, meaning, generally, the value of one’s assets.
• Dispose of one’s estate according to one’s “own fixed purpose” — doing what one meant to do.