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The devil is in the details in battle over artist's trust, p. 3

We have been talking about Robert Rauschenberg, an artist who helped to shape the Op Art movement of the 1960's. One of Rauschenberg's most famous works, the mixed media "Canyon," made headlines a couple of years ago when its owners wanted to sell it. But "Canyon" features a large, stuffed bald eagle, and bald eagles are protected by federal law. Selling "Canyon" would be a felony.

At any rate, our discussion focuses on a legal battle between the trustees appointed by the artist and his foundation. Rauschenberg's will gave all of his assets to the trust, and the trust's primary beneficiary is the foundation. But the trust documents did not provide for compensation for the trustees, and the trustees and the foundation didn't address the matter, apparently, until the trustees asked for $60 million in pay.

During their tenure the value of the trust has greatly increased. Still, even if the assets are now worth $2 billion -- roughly three times what the trust was worth at the time of Rauschenberg's death in 2008 -- is the administration of the trust worth $60 million?

An expert for the foundation says no -- or, to be exact, an expert for the foundation says the amount is "unconscionable."

In general, the law likes to give direction when none is offered by the testator or trustor. If you die without a will, for example, the state's laws of intestate succession will govern the distribution of your estate. (Of course, you don't have to worry about life insurance policies, retirement funds or the like, if you have named beneficiaries.) The result may be exactly the opposite of what you wanted, though: Your evil sibling or feckless grandchild could inherit the whole kit and caboodle, even if you wanted all of your assets to go to the Animal Humane Society.

When a trust fails to stipulate compensation for trustees, state laws -- in most states, that is, and certainly in Texas -- provide guidance. The guidance, however, is merely that the compensation be "reasonable." And what qualifies as "reasonable" is very much open to interpretation.

The foundation is firm in its belief that $60 million is not reasonable. The trustees have not kept complete or accurate records, the foundation asserts in court documents. And an analysis of the books reveals that the trustees have already paid themselves $5.7 million. Even that is "grossly disproportionate," the foundation's expert says.

The foundation criticizes the trustees for lax timekeeping and failure to provide any kind of annual accounting, ever. The result is a complete lack of "checks and balances" among the trustees and "unbridled" spending of trust assets.

The parties have been duking it out in court for years, but a resolution may be in sight. It looks as if the case will go to trial in 2014. A March 31 hearing may set the date.

Sources: 

Chron, "Late artist's trustees seeking $60 million in fees," Tamara Lush, Jan. 7, 2014

The Huffington Post, "Robert Rauschenberg's 'Canyon' Donated To MoMA," Katherine Brooks, Nov. 28, 2012 

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