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Epstein’s Will Won’t Change Much

Little St. James Island, owned by Jeffrey Epstein until his death.
Little Saint James, U.S. Virgin Islands. Photo by Flickr user Navin75.

Jeffrey Epstein allegedly abused and mistreated many people during his life. Now, in death, some news outlets are claiming he played dirty one last time.

Two days before his death, which has been ruled a suicide, Epstein signed a new will. This change to his estate plan led to reports claiming he “may have gamed the system” (as per The Associated Press). Several other outlets, including The Guardian, Time and Fox Business, were more measured in their language but still stated that the new will could make it more difficult for Epstein’s accusers to collect damages.

Yet based on the facts that are publicly available, there is less to this story than meets the eye.

Epstein’s will puts more than $577 million of his assets into a newly created trust. Estate planers call this sort of document a “pour-over” will. The main benefit of such an arrangement is privacy. A will is a public document; in fact, you can read Epstein’s online. Under most circumstances, a trust instrument is not public. Thus the trust’s beneficiaries are not a matter of public record, at least so far. The will noted that Epstein’s brother, Mark Epstein, would have been entitled to 100% of the estate if Epstein had died without a will, but it is unknown whether Mark Epstein is a beneficiary of the trust.

Much of the reporting around Epstein’s new will characterized it as a strategy to “hide” money from the women who say Epstein sexually abused them. “This is the last act of Epstein’s manipulation of the system, even in death,” Jennifer Freeman, an attorney who represents child sex abuse victims, told the AP. But so far I don’t see evidence that the pour-over will makes it substantially more difficult or less likely that Epstein’s accusers will recover damages from his estate.

If Epstein signed the will and trust documents but did not transfer title to any assets before he died, the assets are still part of his estate. Based on the text of the will, this seems likely. Epstein directed his executors to pay funeral and administrative expenses, as well as any transfer taxes, out of his estate, and then to give all of his remaining property to “The 1953 Trust.” The will notes that the trust is dated Aug. 8, 2019, the same day Epstein signed the will itself. While it is not known for certain whether the 1953 Trust was revocable or irrevocable, I suspect a revocable trust was more likely.

Under these circumstances, the claims of any Epstein creditors, and thus of his purported victims, automatically become claims against his estate, though claimants may need to take steps to timely state those claims before the probate court. For example, for estates probated in New York state, creditors have seven months after an individual’s death to assert their claims. Some accusers have already filed lawsuits against Epstein’s estate.

Before the executors can properly transfer assets to the trust, they will need to first resolve and satisfy creditors’ claims. This is no different than if the will had named the beneficiaries directly. Article One of Epstein’s will includes the standard instruction for the executor to pay “debts duly proven and allowed against [the] estate.” The trust is simply the estate’s sole beneficiary, in place of otherwise unnamed individual beneficiaries. It is a stand-in with no greater or lesser rights than those possible individuals or entities (charities or other organizations, for example).

The probate court generally handles any creditors in a particular order. (Probate is governed by state law or, in this case, the law of the U.S. Virgin Islands, so that order varies.) Governments that are owed back income taxes or other payments often get preference, as do secured creditors such as banks. Estate administration expenses also generally precede the claims of litigants. Even if Epstein’s beneficiaries had been individuals, charities or any other entities rather than a trust, Epstein’s accusers would still need to convince a judge that they are entitled to compensation after those earlier creditors had been satisfied. The trust does not change any of this. Some analysts have also suggested the U.S. government could bring a civil forfeiture action against Epstein’s estate. It seems early to assume that federal prosecutors would make such a move, but if they did, the current will would not impede them.

It does not seem that Epstein managed to transfer title of any assets to the trust before his death. Depending on the jurisdiction of the trust and location of the trustees, creditors could have faced varying degrees of difficulty in recovering those assets if he had. In that case, it might have been harder – though not impossible – for his alleged victims to secure compensation. Even if Epstein had transferred assets to the trust while sitting in prison and subject to the claims of his creditors, such transfers would likely be voidable. The principle of “fraudulent conveyance” could have come into play if Epstein’s transfers to a trust left his estate unable to pay pre-existing liabilities. But based on what is publicly known, this seems to be a moot point. I cannot say I am surprised Epstein failed to make such transfers while sitting in prison in such a high-profile situation, particularly in the two days between signing the new will and his death.

It’s also possible that someone, potentially Mark Epstein, could dispute the will’s validity. Bridget J. Crawford, a law professor at Pace University, told CBS that the timing of the will relative to Epstein’s suicide could open the door to arguments that he created the new will under duress or undue influence. “It is far from a given that Mr. Epstein possessed mental capacity,” Crawford said. The probate judge in the case could also rule that Epstein lacked testamentary capacity (that is, the ability to create a valid will). While it is far from certain the will won’t hold up to scrutiny, it is one more potential wrinkle in a complicated case.

Thanks to the peculiarities of the New York bar and its probate court system (known there as Surrogates Court), pour-over wills are atypical in the Empire State, although they are nonetheless used. They are very common in many other U.S. jurisdictions, including Florida, where Epstein made his now-notorious plea deal in state court after entering a nonprosecution agreement with the U.S. attorney’s office. Creditors regularly bring claims against Florida estates and those in the U.S. Virgin Islands, where Epstein maintained his legal residence. A pour-over will does not act to frustrate those claims.

It will certainly be a long, arduous legal process for claimants to attack Epstein’s estate, especially if his fiduciaries choose to resist rather than settle such claims. But that would have been true even if he had not involved a trust. The privacy or secrecy (depending on your point of view) of the trust’s ultimate beneficiaries may even end up working to the detriment of those beneficiaries, who may not know that they stand to lose if the executors and trustees are too eager to settle on generous terms with individuals who say they were Epstein’s victims. In this sense, from the claimants’ perspective, the identity of the trust beneficiaries likely will not matter. Regardless of the final result, the wrangling over Epstein’s estate is likely to drag on for years.

Still, I don’t see how Epstein’s attempt to reorder his affairs while in jail and, perhaps, contemplating suicide does much of anything one way or another to further victimize anyone. He had as much right to write a will as anyone, and more pressing reasons than most.

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s recently updated book, Looking Ahead: Life, Family, Wealth and Business After 55. His contributions include Chapter 1, “Looking Ahead When Youth Is Behind Us,” and Chapter 4, “The Family Business.” Larry was also among the authors of the firm’s book The High Achiever’s Guide To Wealth.

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