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Pat Bowlen’s Trust: A Fumbled Handoff

The trust that will determine the new owner of the Denver Broncos has failed in nearly every way, but it has succeeded in one: as a cautionary tale.

No one likes to think about their own incapacity or mortality, which means estate planning is no one’s favorite financial planning task. My colleagues and many other financial advisers have observed that nearly any plan is better than no plan, and this is true. But any Broncos fan – or anyone capable of Googling the phrase “Denver Broncos Trust” – can see that a bad plan can still result in substantial damage. Even with the best of intentions, estate and succession plans can fail spectacularly.

The ultimate goal of such a plan is a smooth transition, with as little fighting among heirs as possible. Yet no one can foresee all possible contingencies. This means that without communication and flexibility, a plan can easily end in hurt feelings and litigation.

The Bowlen Family Trust

Pat Bowlen purchased the Denver Broncos in 1984. Sometime prior to 2004, Bowlen established a family trust with the intention of eventually transferring control of the team to one of his seven children, while giving the others a financial stake in the franchise. Bowlen publicly acknowledged that he had been diagnosed with Alzheimer’s disease in 2009, and ceded major decision-making for the team in 2010. He fully relinquished control to the trust on July 23, 2014.

Four years later, the trust remains in control of the team, and no outsider can be entirely sure why. One of the major advantages of using a trust, after all, is privacy. Two Denver journalists I spoke with, Mike Klis of 9News and Troy Renck of Denver Channel 7, confirmed to me that even Bowlen’s children do not have the full details of the trust, much less the general public. Some information, however, has leaked out in news articles over the past four years.

Three trustees now control the Broncos until a new successor can be appointed under the trust’s terms: Joe Ellis, the current president and CEO of the team; Rich Slivka, executive vice president and general counsel; and Denver attorney Mary Kelly. Sports news site The Athletic reported that the trustees sent Pat Bowlen’s children and his wife, Annabel, a memo in February 2015 outlining criteria that the trust requires in order for an individual to be a viable candidate for the team’s controlling owner. These requirements include subjective qualities such as leadership, integrity and sound judgment. The trust also requires specific educational and experience qualifications: To be considered, a candidate must hold a bachelor’s degree paired with an MBA, J.D. or other advanced degree related to business. He or she must also have least five years of “senior management experience” with the NFL, the Broncos or the Stadium Manage Company, the organization that runs the team’s stadium in Denver. According to the memo, even if the candidate meets these criteria, the trust is not obligated to appoint him or her controlling owner. The ultimate decision is up to the trustees.

Of Bowlen’s seven children, one has shown no interested in vying for control of the team, and two are too young to be viable candidates. Patrick Bowlen III has not obtained the necessary level of education to qualify, and John Bowlen Jr. – once considered the heir apparent – has been disqualified due to a pair of arrests in 2015 and 2017. This leaves only two of Bowlen’s children as viable candidates for control of the team.

On May 31, 2018, 47-year-old Beth Bowlen-Wallace issued a statement officially putting her hat in the ring to be considered for the role of the Broncos’ controlling owner. Her educational and professional qualifications seemed consistent with the trust’s requirements: She graduated from the University of Denver’s Sturm College of Law in 2016 and also worked with the Broncos as the director of special projects until 2015. After her stint with the Broncos, she assisted and supported several Colorado-based nonprofit and charitable organizations, including the Alzheimer’s Association. She now works as an executive in the oil and gas industry.

Despite her qualifications, the trustees quickly made it evident that they did not think she cleared the subjective bar. They released a statement the same day that Bowlen-Wallace announced her candidacy. That statement said, in part: “As trustees honoring the clear wishes of Pat, we have thoroughly evaluated whether Beth is capable of succeeding her father as controlling owner. We have determined that she is not capable or qualified at this time. We have communicated our decision to Beth and her lawyers on multiple occasions. She is also fully informed as to why her employment with the team ended in 2015. Although Beth has declined our invitations to discuss her qualifications for the last two years, we will continue to proactively engage and meet with any of the Bowlen children who express a desire to earn the right to succeed their father.”

This seemingly definitive answer has not ended Bowlen-Wallace’s efforts to win control of the Broncos. Bowlen-Wallace’s uncle Bill Bowlen and her full sibling, Amie Bowlen-Klemmer, both support her bid, and they jointly filed a lawsuit in October. They asked a Colorado District Court to remove the trustees “due to their failure to uphold Pat Bowlen’s wishes and act in the best interest of Pat Bowlen, his family and the Broncos.”

For their part, the trustees seem warmer to the other candidate, 28-year-old Brittany Bowlen, who has also officially stated she aspires to take control of the team. Brittany, Annabel’s daughter and Bowlen-Wallace’s half-sister, also fulfills most, though not all, of the objective requirements laid out in the 2015 memo. She is a Notre Dame graduate with a degree in finance and a recent MBA graduate of Duke University’s Fuqua School of Business; she worked in the NFL office in New York for two years prior to getting her MBA; and she currently works McKinsey & Company, a global marketing consulting firm in Denver. Brittany still must gain a minimum of four years of senior management experience before she has met the trust’s requirements, but this does not seem to be an insurmountable obstacle.

Infighting between Brittany Bowlen, Bowlen-Wallace and the various parties supporting both women has brought the succession process to a standstill. It has also reportedly grown vicious. For instance, the lawsuit from Bill Bowlen and Bowlen-Klemmer claims that Annabel Bowlen, who recently announced that she too has been diagnosed with Alzheimer’s, is trying to block her stepdaughter from taking ownership because she wants one of her biological children to own the team.

As of this writing, the next controlling owner of the Broncos is effectively anyone’s guess. Pat Bowlen reportedly made it clear that if none of his children fulfilled the duties laid out in the trust, an outside buyer could purchase the team, potentially adding further complication. The Bowlen Trust requested arbitration by the NFL on Nov. 23, 2018. Bowlen-Wallace, Bowlen-Klemmer and Bill Bowlen issued a joint statement claiming that this request for arbitration was a clear stall tactic by the trustees, casting doubt on the potential for the success of any such negotiation.

What To Learn From The Mess In Denver

Outsiders, and even many insiders, cannot know for certain what type of trust Pat Bowlen established or all the particulars of its operation. But even without these details, the legal and personal mess involved can illustrate a few common estate planning pitfalls it is important to try to avoid.

The trust’s primary failures are a lack of clear succession planning in advance and little to no communication with the heirs. These two problems are intertwined.

While few of us will need to dispose of a professional sports team as part of our estate, many people have family businesses to hand off to the next generation. As in the Bowlen family, some adult children may show no interest in taking the reins or may disqualify themselves from leadership in obvious ways. But Bowlen’s decision to create a detailed list of criteria, enforced by the trust, shows the pitfalls of not choosing and grooming a particular successor in advance.

For one thing, the trust’s criteria included subjective measures like “leadership.” Properly structured trusts can generally place conditions on the distribution of assets. For instance, an incentive trust may require that a beneficiary pursue a certain level of education or remain gainfully employed. While the law prohibits certain conditions – for instance, a grantor can’t require a beneficiary to divorce her spouse to receive an inheritance – trusts allow for a fairly wide range of conditions.

The Bowlens’ case demonstrates that creating many conditions and introducing subjectivity can create major problems. Bowlen-Wallace has argued that her educational and professional qualifications are sufficient, but it is hard to fight back against an evaluation of her subjective fitness. Did Bowlen and his professional team define “leadership” in the trust documents? How specifically, if so? We don’t know the answer, nor can we know what Bowlen would have thought of Bowlen-Wallace’s bid for control prior to his incapacity.

Perhaps Bowlen made another choice, but failed to allow for the potential that it would not come to pass. Many outsiders thought that John Bowlen Jr. was the clear choice to assume leadership prior to his arrests. If Bowlen truly intended his son to take control, he would have done better to be explicit about the fact, and to include a contingency plan for a case where he could not assume leadership as intended for any reason.

Even if your estate does not include a business or other enterprise, communicating your wishes clearly long before death or incapacity is difficult but crucial. Your children and other heirs may not agree with your decisions, but telling many people your intentions and backing those intentions up with the proper legal framework will cut down or even eliminate the potential for delays, infighting and lawsuits.

New information about the Bowlen trust comes forward regularly, with no end in sight. The ugliness between family members and uncertainty for the team’s future are a stain on Bowlen’s rich legacy. In a succession plan where Bowlen’s wishes were clearer, the trustees might have been able to work with his children to develop a peaceful and orderly plan of succession. In reality, however the fight resolves, I can’t imagine the Bowlen family coming to a harmonious conclusion.

Client Service Associate Aline Pitney is the author of Chapter 12, “What Estate Planning Documents Do I Need?”, in our firm’s most recent book, The High Achiever’s Guide To Wealth.
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