135 THE AMERICAN LAW INSTITUTE Continuing Legal Education Representing Estate and Trust Beneficiaries and Fiduciaries July 7-8, 2016 Chicago, Illinois Will Contests: Direct and Cross, in Action By Lisa Babish Forbes Cleveland, Ohio Emily Pan Cincinnati, Ohio and Elizabeth E.W. Weinewuth Cincinnati, Ohio
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137 Contents of Materials: 1. Case Study - Knowlton, et al v. Schultz, et al. 2. Undue Influence Definition and Elements 3. Deterrents to Will Contests 4. Knowlton Will Contest Complaint
138 ALI-CLE: Representing Estate and Trust Beneficiaries and Fiduciaries 2016 Will Contests: Direct and Cross, in Action 1. Will Contest Case Study: Knowlton, et al v. Schultz, et al. Case No. 2003005071, Hamilton County, Ohio Court of Common Pleas, Probate Division On February 7, 1996, Austin ( Dutch ) Knowlton executed his Last Will and Testament (the Will ). More than 7 years later, just one month before his 94 th birthday, Dutch died on June 25, 2003. The February 7, 1996 Will The Will provided for Dutch s sizeable estate to be distributed to the Austin E. Knowlton Foundation (the Knowlton Foundation ), a charitable organization dedicated to providing grants to colleges and universities in keeping with Dutch s commitment to higher education. Specifically, Item Two of the Will called for all of Dutch s stock in the Cincinnati Bengals to go to the Knowlton Foundation. Item Three of the Will gave the remainder of his estate to a trust that Dutch had created in 1991 and amended the same day he executed his will in 1996 (the Knowlton Trust ). The Knowlton Trust provided for certain payments of principal and interest to Dutch during his lifetime, and upon his death called for small payments to certain named individuals and to purchase an annuity for his sister. After those payments were made (and all debts, taxes, funeral expenses taken care of), any remaining assets in the trust were to be distributed to the Knowlton Foundation. Dutch s Family and the Friends At the time of his death, Dutch had a son, Peter, and two daughters, Suzanne and Valerie, who were the result of his marriage to his first wife, Phyllis. When his relationship with Phyllis soured and they eventually divorced in the early 1970s, the daughters sided with Phyllis. Peter s relationship with his father became strained in the early 1960s when Dutch became dissatisfied with Peter s behavior. After his divorce from Phyllis, his estrangement from his daughters and his feud with his son, Dutch had no family to spend holidays with. Charles Lindberg, who was one of his lawyers, and his wife invited Dutch to join them and their two sons, Eric and John, to celebrate Thanksgiving, Christmas, and Easter. Dutch spent the holidays with the Lindberg family for the next 25 years. Charles Lindberg, the managing partner of a venerable Cincinnati law firm, served as one of Dutch s business attorneys. Dutch s Business Interests, Lawyers, Trust and Foundation Dutch s business interests were extensive and varied. He graduated from The Ohio State University in 1931 as an architect. He founded Knowlton Construction Company which 2
139 ALI-CLE: Representing Estate and Trust Beneficiaries and Fiduciaries 2016 Will Contests: Direct and Cross, in Action designed and built more than 160 college and university buildings throughout the Midwest. In the late 1940s, Dutch and his brother founded Ohio Aviation Company which became a leading distributor of Beechcraft airplanes. In 1966, he purchased an interest in the Cincinnati Reds baseball team. He also became one of the founding owners of the Cincinnati Bengals and remained a majority shareholder of the Bengals until his death. As Dutch s fortunes grew throughout the years, he acquired a large estate in Delaware County, Ohio named Emerald Farms, where his family owned and raised horses. He had an ocean-going yacht named the Emerald K. He also owned residences in Aspen, Colorado; Ft. Lauderdale, Florida; and a mansion in Cincinnati, Ohio. Lindberg and his firm s lawyers represented Dutch over the years. One of Lindberg s partners drafted that 1996 Will, and other estate planning documents for Dutch. Dutch named Lindberg and his brother-in-law as the executors of his estate in his February 7, 1996 Will. He also named Fifth Third Bank as the successor executor if one or both of the executors was unable to serve. Dutch s brother-in-law predeceased him. Dutch chose Charles Lindberg as a co- trustee of the Knowlton Trust, along with Fifth Third Bank. Dutch picked Charles Lindberg and both of his sons to be the co-trustees of the Knowlton Foundation. The Will Contest Action After Dutch died in 2003, two of his children, Valerie and Peter, filed suit to contest his February 7, 1996 Will, claiming it was the result of undue influence exerted by Charles Lindberg, Dutch s attorney. The allegations included claims (1) that Lindberg engaged in unethical conduct when his law firm represented Dutch, the majority owner of the Cincinnati Bengals, at the same time it represented the Cincinnati Bengals and, (2) that Lindberg benefitted under the February 7, 1996 Will because assets went to the Knowlton Trust of which Lindberg was one of the trustees, and (3) that Lindberg benefitted under the February 7, 1996 Will because all of Dutch s assets eventually went to the Knowlton Foundation of which he was one of the Trustees, and (4) that Dutch was susceptible to influence because he was on medication at the time he executed the February 7, 1996 Will. The litigation trudged forward from October 2003 until the trial that started on November 5, 2007 and did not end until December 4. An unsuccessful appeal followed. 3