Atkins estate battle offers advisers lessons

CHICAGO — The widely publicized dispute between diet guru Robert Atkins’ widow and the trustees of her trust is a cautionary tale for financial advisers and their clients about what can happen in estate cases, observers say. In the legal fight, Veronica Atkins is attempting to fire the three men who were overseeing her husband’s trust worth more than $400 million. She was paying each of the three $1.2 million annually for a total of $3.6 million in trustee costs each year. Ms. Atkins wasn’t available to comment, but her attorneys wrote in an e-mail interview that the three men took advantage of her when she was in a deep depression after Mr. Atkins died in April 2003 after slipping on some ice in New York. They also pointed out she was paying them more than the statutory limits for trustee payments. The three men, Clive Metz, an entrepreneur, John Mezzanotte, an accountant with Mezzanotte Associates LLC of Wallingford, Conn., and John Corrigan, who according to court documents worked at Corrigan & Baker LLC in White Plains, N.Y., declined to be interviewed. The attorney for the three, Bruce A. Katzen of Miami-based Kluger Peretz Kaplan & Berlin P.L., said they left their day jobs and were much more than just trustees of the estate. He said that Ms. Atkins willingly agreed to pay money out of her own pocket for their salaries. Mr. Katzen argues that the three men managed her personal business and handled all financial matters for her and would even accompany her to the doctor, if she asked. He said that Ms. Atkins’ new husband, Alexis Mersentes, whom she married in a private ceremony in March, now is pulling the strings and sought to remove $100 million from the trust. She began motions to fire the men when they said no to Mr. Mersentes’ request, Mr. Katzen contends. Mr. Mersentes uses the same legal team as Ms. Atkins. In an e-mail, the attorneys said that Mr. Mersentes did not take advantage of her. Ms. Atkins’ lead attorney, Roy Black, a partner with Black Srebnick Kornspan & Stumpf PA in Miami, said in a statement that she never sought to remove any money from the trust. Ms. Atkins has requested that the Surrogate Court of New York remove the trustees because she contends they violated their fiduciary duties. The three men purchased a $15 million life insurance policy on her life naming themselves the beneficiaries when she died. Mr. Katzen said that Ms. Atkins asked the three to purchase the life insurance policy. “They were paying for the life insurance out of their own money,” he said. “That was her desire.” Not all cases garner the same type of national attention, but internal battles among advisers, trustees and the beneficiaries are common in estate cases. Advisers and attorneys say that ironclad estate and trust planning can prevent such a mess from occurring. Mr. Atkins set up a marital trust that made Ms. Atkins a beneficiary under which she would receive income from the trust. It is unclear how much that income is, but reports indicate the income ranges from $14.4 million to $25 million annually. Her attorneys declined to disclose the specific amount that she receives. Upon her death, the remaining money in the trust is designated to a number of remainder beneficiaries including family members, charities and the Robert C. and Veronica Atkins Foundation. Advisers say that legal battles and internal battles are quite common when a person is named as an income beneficiary and there also is another person or entity that is the remaining beneficiary. “People will become very disenchanted, and that’s a polite way of putting it. They’ll become downright angry and scream when they have to live under those guidelines of the will, but the will is the final say of the deceased,” said Ruth L. Forehand, CFP with Financial Advisory Consultants LLC in Naples, Fla. Even though these situations become emotional and personal, she said that advisers are required to uphold the standard of the documents. “It’s not up to the advisers or the widow,” Mr. Forehand said. “It’s up to the documents.” Depending how the documents are written, beneficiaries can have more freedom to make changes, such as hiring and firing trustees. “Trustees are faced with the very serious conflict issues between the income beneficiaries and the remaining beneficiaries,” said Terry L. Turnipseed, an assistant professor at Syracuse (N.Y.) University College of Law. “Often times, there are quite a few tensions. It helps to draft the trust properly. You can put in very clear standards as to who the trustee should favor if need be.” In the Atkins case, Mr. Metz, Mr. Mezzanotte and Mr. Corrigan were co-trustees of the estate along with Ms. Atkins. Her attorneys say that she was taken advantage of after Mr. Atkins died. Ms. Atkins had met Mr. Metz in the Caribbean where she had traveled with Mr. Atkins, and he called days after Mr. Atkins died and offered to be the trustee. Mr. Metz then asked two of his acquaintances to be her other trustees. The trustees that Mr. Atkins had appointed offered to resign, and Ms. Atkins appointed Mr. Metz, Mr. Mezzanotte and Mr. Corrigan to be her trustees. When her depression cleared and she realized she was paying more than statutory limits, she sought the court’s permission to remove them as trustees. None of the men are certified financial planners, but Mr. Katzen said they are businessmen who made a sacrifice to give up their own jobs to work solely for Ms. Atkins. ‘Good faith’ “My clients have been acting in the highest of good faith to the beneficiaries of the trust,” he said. Ms. Atkins is being taken advantage of by her new husband, whom has a reputation for hunting rich ladies, maintains Mr. Katzen. This is Mr. Mersentes’ third marriage. He is divorced from winery owner Laura Mentzelopoulos and was widowed by Dallas millionaire Doris Dixon. Mr. Mersentes won’t receive any money from Ms. Atkins’ inheritance and was looking out for her best interests, according to their lawyers.