I’m a retro guy. Almost daily, I drive a 1953 Chevy Bel Air that I’ve had for over 20 years. I enjoy listening to Chuck Berry, Bing Crosby, the Andrews Sisters, the Ink Spots, and Amos Milburn. I would love to wander the 18th Century Lake District in England with poet William Wordsworth or hang out with writers Ralph Waldo Emerson and Henry David Thoreau in 19th Century Concord, Massachusetts. In addition to preferring my Packers and Sharks gear to sport the old logos instead of the modern ones, I also love wearing gear of defunct sports teams such as baseball’s Montreal Expos and hockey’s Quebec Nordiques and Hartford Whalers.
The Hartford Whalers – Connecticut’s only major professional sports team and New England’s alternative to the Boston Bruins – broke the hearts of millions of hockey fans when the team’s owner, Peter Karmanos, Jr., moved the team to North Carolina in 1997 and changed the name to the Carolina Hurricanes. Whalers fans’ hearts were broken a second time when the team appeared in the Stanley Cup Final in 2002 and a third time when the team won its first and only Stanley Cup in 2006 after so many years of futility in Hartford.
Of course without this sad history, my Whalers attire would not be the nostalgic tribute that it is today. I’m certainly not alone: Whalers garb can be spotted all over the world, the team still has a booster club which meets in Connecticut on a regular basis, and several minor league hockey / professional women’s hockey teams have been named after the beloved franchise.
According to reports, it appears the heartbreak associated with the team is not limited to its fans.
Peter Karmanos, Jr.’s sons recently filed a lawsuit against him in excess of $100 million over estate planning he put in place nearly twenty years ago. According to a complaint filed in a Michigan court, in 1996 Karmanos irrevocably transferred stock in the company he founded, Compuware Corporation, to a family partnership owned by irrevocable trusts set up for his three sons as part of an estate planning strategy.
Since that time, the value of the stock appreciated to more than $100 million. However, reports indicate that in recent years his personal wealth plummeted due in part to financial losses associated with the Carolina Hurricanes. In an effort to find liquidity, he borrowed from the family partnership, promising to repay the loan at specified rates. According to the complaint, he stopped payment on the loans and his sons claim that payment in full is due immediately.
It will be interesting to see how Karmanos responds to the complaint and how the case will proceed through the judicial system. In any event, several lessons can be drawn from this unfortunate family squabble.
First, it is important to understand that if you transfer assets to your children or other loved ones for estate planning purposes, you have truly parted with those assets irrevocably. In such a situation, it can be tempting to believe that you have made such transfers only for tax purposes but that you still retain “unofficial” control. This lawsuit indicates that once a gift is given, you can’t just take it back when your circumstances change.
Second, because circumstances can change, before executing an estate planning strategy that involves irrevocably transferring assets immediately, you should consider building in possible exit strategies that would be legally viable and would avoid future disputes.
Third, and perhaps most importantly, you never know how even the closest of loved ones will react when money is involved. From Karmanos’ perspective, he probably never could have imagined that his owns sons would file a lawsuit against him for a gift that he made to them when his financial portfolio was more promising. From the sons’ perspective, they probably felt it was no risk to make a loan to their dad.
KRASA LAW, Inc. is located at 704-D Forest Avenue, Pacific Grove, California and Kyle may be reached at 831-920-0205.
Disclaimer: This article is for general information only. Reading this article does not establish an attorney/client relationship. Before acting on any of the information contained within this article, it is important that you consult a competent attorney who is licensed to practice law in your community.