Should you have a will, a trust, or both? On this episode of PIVOT with Darryl Lyons, Darryl explores the differences between wills and trusts through the complicated estate of music legend Jimmy Buffett.
Buffett’s estate, valued at hundreds of millions of dollars, has become the subject of a legal dispute involving trustees, beneficiaries, and questions about how his assets should be managed and distributed. While the circumstances are unique, the underlying lesson applies to families of all wealth levels: estate planning is about more than deciding where your money goes. It is also about making your intentions clear and having important conversations before you’re gone.
Darryl breaks down key estate planning terms, including trusts, marital trusts, beneficiaries, trustees, and the role of corporate trustees. He also explains why families with blended families, significant assets, property in multiple states, or concerns about incapacity may want to consider a trust.
You’ll learn:
● The difference between a will and a trust
● Why some families choose to establish a trust
● How trustees and beneficiaries fit into an estate plan
● What a marital trust is designed to accomplish
● How complicated estates can create conflict among family members
● Why choosing the right trustee matters
● How communication can help prevent family disputes after your passing
● Why estate planning should include conversations with the people affected by your decisions
Estate planning is not just about what happens to your money after you’re gone. It’s about making your intentions understood while you’re still here.
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Transcript:
It’s my conviction that there’s going to be a meeting about your money when you pass away, with or without you. Let me say that again. There’s going to be a meeting about your money when you pass away, with or without you. I know it’s uncomfortable, but have the meeting with you being there and wrestle with these things. Otherwise, it tears apart families and that’s the last thing we want our money to do. But sit down with the family members and unpack it, and describe the intentions, and then resolve any issues. Hey, this is Darryl Lyons, CEO and co-founder of PAX Financial Group. and you’re listening to PIVOT with Darryl Lyons and this information is general in nature only. It’s not intended to provide specific investment, tax or legal advice. Visit PAX Financial Group for more information. Also want to mention that this is what I consider at the beginning of a conversation, because I really do think that the really wise money decisions happen in a dialogue, in a conversation. And so I want this to kind of trigger conversations between family or financial advisors or whoever you trust. So the pondering with PAX question that I got on social media is, should I do a will or a trust? Which one do you recommend? Of course, I can’t give legal advice on the air like this. I did go to law school, but I am not an attorney. I am not an attorney, and I don’t have the, your entire situation in front of me, so I have to just answer that question in a more general context. But I want to actually instead of just talking about that question, I want to do the whole show about generally wills and trusts and the way I’d like to do it. I was I was inspired by reading The Wall Street Journal, and I came across an article that was interesting to me. And what I’d like to do is share this article with you. It’s about Jimmy Buffett, you know, Jimmy Buffett, Margaritaville and his estate when he passed away. Because it’s a fascinating situation and one that we can learn from.
So if you’re Jimmy Buffett fan, this will be interesting to you. If you’re not. It’s to me, I think it’s still interesting. And then at the end I’m going to explain some terms. I’ll define those terms. So you make and I make sure that you understand them. And then I’ll talk a little bit about a will and a trust and how they’re different.
So that’ll be kind of the lay of the land as we go forward. But let’s talk about Jimmy Buffett and his $$275 million trust. What? He wasn’t a bad business guy. He had real estate. He had, of course, you know, his, rights to his, his the work that he did. He had some businesses, partial business ownership. So he had built up a nice estate. He was married and, happily married, I can’t speak of. It was like a lot of marriage, especially with famous folks. It was, you know, there was challenges. And some of that is why the estate is being contested. In fact, at the at the funeral, there was there was a son in law that he and, you know, all of this was caught on camera, said some very foul things about his widow and her name’s Jane, and they were married, like I said, 46 years. And that was made public. Of course, recognized in the Wall Street Journal. And that actually could have been a triggering event for some editor to write about this whole drama, because from a financial perspective, it’s certainly a case study that’s interesting for financial folks, but it does have a degree of Hollywood drama in it. But And by the way, this, let me let me rephrase this, this, it actually the son in law said f you, Jane, and that was caught on camera. That was actually not excuse me. That was not at a funeral. That was at a Hall of Fame event, where Jimmy was recognized and he was frustrated with, I guess, because he was married to. So that was the son in law. He was married to Savannah, the daughter, and he was frustrated with something that had to do with a car title transfer.
Now, the complexity that took place was Jimmy did some mistake planning and the money went to a trust. The money. When you have a trust, typically, especially with this large of an estate, you have trustees. Sometimes I’ll recommend corporate trustees, like a bank that can be independent and, you know, follow specific rules. In this case, Jimmy had two.
He had what we call Coach Rusty’s, and one was his. I guess they called him a financial advisor or business manager. The other one was his wife. And by the way, he did die in in 2023. So this is, you know, this is a few years of just wrestling with this stuff. But the but the he it is said that he had a co-trustee because he wasn’t a 100% confident that his wife Jane, could navigate all the complexities of the business.
He like I said, he owned restaurants. He owned, tequila business apparel, casinos, cruises. I mean, I don’t know if he had ownership and all that stuff, but that was all kind of, you know, part of his lifestyle. At the very least, I do know that he owned, some restaurants, regardless of everything he owned. It was $275 million. So it was a lot of stuff interesting. Like as a side, he died. And for those that don’t know, he died at 76 of skin cancer. And the irony of his music is you usually listen to his music when you’re on the beach or out in the sun. And so that’s a little irony of life. There’s no humor in it necessarily, but just irony.
He loved to surf, and as far as I know, he was a pretty happy, fun loving guy. And like I said, a pretty good business person.
Now, when he left his money again, he did pretty good estate planning. His wife is the sole beneficiary. Again, I’m going to define these at the end. And he had three children so that if his wife passed away, the money goes evenly to the three children.
But the trustee is where it gets kind of tricky because even though the wife is the beneficiary of the money, it was put in something called a marital trust. And a marital trust means that, well, I wanted to define that at the end, but I’ll define it now. It means that the wife, the spouse gets income, and anything left over goes to the three kids. But determining and I’m pausing slowly so you can make sure you continue to to stay with me here. But to determine how much income and where that income comes from, has a degree of complexity and is subject to judgment. An oversight. And that’s dictated under something called a fiduciary responsibility of a trustee, meaning a standard that is a high standard of due diligence and independence. So there’s not this self-interest involved if you’re a trustee. So the Jane is Jane, the wife is a co-trustee, and so is this other guy. And his last name is Mose. And I do not know if I’m pronouncing that right, but the two people are Coach Rusty. So the challenge here is that you get two people that might have differing opinions on how much income is needed out of the marital trust, and where do you get that income from. And so that’s that’s where in lies the contention. The again, the business is complex. So you’ve got real estate which is which was about $35 million. You’ve got he had something called a margaritaville business. He actually owned some airplanes as well. Music equipment, vehicles mean a lot of stuff. But you think about it, not all of these things are producing income for Jane. So if in order to to generate income, then you have to sell stuff or have things that produce income. And I’ve spoken spoken about this before of like I use, I use the cow and milk analogy. So if you have a cow that’s producing milk, that would be the income. But if the cows not producing milk and you need income, you’ve got a butcher, the cow, you know what I mean. And So here we herein lies the challenge is not all of these assets are producing income, or I should say, enough income for Jane to meet her standard of living. So, Jane wants to maintain, she lives in the Hamptons. She has certain lifestyle. She wants some cash. And so she’s expecting cash, not getting as much as she would want and so there’s an accountant involved. Her contention is that the accountant isn’t forthright and that he’s keeping things from her and that, she’s demanding more clarity. So there’s this immediate lack of trust, which really pushes out problems. And so her she further, you know, makes the case that, the Coach Rusty, is pushing her out and hiding information.
She’s also making the claim that this code trustee is billing on the trust. And this whole this trust. And this is her quote. That is just a piggy bank for the Coach Rusty. And now a trustee can charge for their services. So, trustee, because of the degree of responsibility and due diligence, there is provisions in the trust that allow a trustee to get paid has to be reasonable.
And so Jane’s contention is this guy mows into how I pronounce his name. Is a Coach Rusty hiding information, not getting her the income she needs or wants. And, and is just building the trust just to make a bunch of money. And she’s just repeatedly, repeatedly demanding accountability. So This guy was a longtime friend of Jimmy, and they had known each other a while. He was, he was actually a boat captain, and he I believe he had the capability of doing this. I really don’t know, as I’m reading, you know, trying to digest this content, it doesn’t really tell you, but but Jimmy trusted him. And I think that was the main thing is whether or not he was competent or not. Jimmy trusted him. And he had some concerns about Jane’s ability to manage this estate.
The problem is one of the problems is, is that the because there’s not enough milk from all the of these assets, I say not enough milk is there’s the article says there’s less than $2 million of dividends and income coming out. But that’s not enough for Jane.
That’s not enough. So the trustee says, look, if you want more money, you’ve got or let me say it this way, if if you want to make this work, you’re going to have to reduce your standard of living. And I don’t know if that’s something that you want to be saying to a widow in a contentious situation. So, you know, you can you imagine a Coach Rusty saying, okay, you need to cut your expenses now?
I guess a reasonable person might say, I’m willing to do that, right? But in this situation, she’s like, no, I’m not cutting my lifestyle. You’ve got to figure it out. And it’s Jane’s contention is that you’re mismanaging things. So I mean, they’re fighting over this. This is in the courts costing a lot of money, as you would imagine. And, there’s a process that the Coach Rusty is going through and it’s called decanting, which means moving from one trust to another. And there’s another process so that’s something that the trustees looking at is saying, okay, can we legally because of the contention here, can we move this from a marital trust to a different type of trust to remove Jane as a Coach Rusty to keep her from being difficult?
And the case, the default case that would be being made would be for the benefit of the contingent beneficiaries, the three kids. You can also do something else in a trust situation where it’s called adding a consent, which is possible. You know, I don’t know actually the legal process of adding a consent. But this would be somebody that, hey, look, we’ve got a Coach Rusty situation, which is like two partners in a business who don’t get along. And this consensus would be a third party that would veto, the other one. And so there’s that angle that they’re going through as well. So there’s a couple little legal angles here if they can’t, which ultimately what they’d like to do, I believe, is remove Jane as a coach. Rusty because of of this, this situation which Jane knows this is happening.
It’s in the courts. It’s going through a process and she calls it a power grab. And it could be I just don’t know. See that most of the time, most of the time these contentious situations happen. There’s the interesting thing is usually there’s like step families involved, like stepmother, step kids, cheating. I’ve seen it personally with, a mistress involved, but this one is is really unique because it’s a long time friend and a 46 year old marriage. So not like a newly new wife or a girlfriend. So that’s where it’s different. But regardless, it’s the trust is broken. So this has to be resolved.
The claim that the co-trustee is making, is that Jane is trying to disinherit the kids because of going back to the original story. There’s already some issues between Savannah and the brother-in-law.
So the trustee is saying, look, I don’t think Jane likes her daughter and her son in law. And if we end up giving all this money to her, she’s gonna spend it all because she doesn’t like them. And so that’s part of the case. And, you know, to a certain degree, she has the legal right to do it.
And the co-trustee, the other trustee, the financial advisor has the legal right to push back. So this is just this is a complete mess. And it’s it’s a sad thing because you build And hear me out as, you know, your own personal situation. You build all this wealth and money only to see families fight.
It’s my conviction that I’m gonna land the plane and close this out.
It’s my conviction that there’s going to be a meeting about your money when you pass away, with or without you. Let Let me say that again. There’s going to be a meeting about your money when you pass away, with or without you. I know it’s uncomfortable, but have the meeting with you being there and wrestle with these things. Otherwise it tears apart families and that’s the last thing we want our money to do.
So to answer the question and this is a frustrating, frustrating situation, unfortunately. But to answer your the original question, pondering with PAX should I have a will or a trust?
A trust isn’t independent of will. Usually at both. A trust is usually established when somebody wants to avoid probate. So that’s usually one example. Maybe they have assets across different states.
They have blended families. They’re worried about incapacitation, not just death. Usually a trust is established. Usually a trust is established when you want some degree of more, say in the distribution of money. It can be a result of the accumulation of wealth, or can be just degree of complexity that exists in your life. So if you have any of those situations I described, you may want to consider a trust and then not just establishing a trust what Jimmy did and say, wash your hands clean and say, I figured it out, but sit down with the family members and unpack it And describe the intentions and then resolve any issues. Some of the terminologies I used throughout this conversation today was trust, which is a legal agreement for the benefit of somebody else, a marital trust, which is really designed to create generally income for the surviving spouse, but often designed to leave a legacy to a certain degree to the next generation. I mentioned the term beneficiary. I want to make sure you you understand that you generally do, but that’s the person that’s entitled to receive income or assets from the trust.
I do want to mention the term trustee, which is we talked about Coach Rusty’s, but those are two people responsible for, transferring money and assets out to the individual persons. That can be a corporation, a corporate trustee. And if you need a corporate trustee, PAX has some relationships with corporate trustees we can introduce you to. But sometimes it’s just a family friend or a financial advisor or a family member, just depending on the situation and more.
The complex decision is dissenting. You heard me talk about that which is disagreeing with something. It’s a legal term for disagreement and then a consent for somebody who generally gives permission for decisions and often vetoes things. Those are some of the definitions I described. And this thing don’t discount the complexity complexities that exist after an estate after somebody passes away.
But I do want to encourage you. So that way your situation isn’t as messy as Buffett’s. Regardless of the amount of assets, make sure you have conversations with your family members. And as always, I want to remind you you think different when you think long term. Have a great day.
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