Two years ago Anna Nicole Smith died but her legacy lives on. Smith – famous for almost single-handedly creating the FFBF (famous for being famous) lifestyle - left behind a daughter and an ongoing civil suit against the estate of her late husband, billionaire J. Howard Marshall II.
In the intervening years, Smith’s daughter Dannielynn has shared the spotlight of her father, erstwhile photographer, and newest member of the FFBF Larry Birkhead. The stalled litigation, however, has fallen into near-obscurity, despite its potentially devastating consequences.
Marshall v. Marshall is a landmark case, boasting more than a decade of litigation in two states before ever reaching the Supreme Court, and yet even now the case remains unresolved. To some the case is a Hollywood tale of decadence involving a stripper-turned-Playboy Bunny who finds true love in the arms of her octogenarian, wheelchair-bound billionaire prince charming.
To the rest of the world this case should stand for the proposition that an audaciously crafted legal scheme could almost succeed at snatching a nearly billion dollar estate away from its rightful owners.
The case has potentially ominous consequences. If the federal court ultimately rewards Anna Nicole’s legal team for its efforts, all of our estates are in jeopardy. The legal attack on this estate is a potentially new and dangerous type of litigation abuse which will inflict an enormous burden on the inheritance plans of all Americans, particular baby boomers who are now just entering retirement age. For them there are trillions of dollars are at stake. This case could decide whether they – or the courts- will choose their beneficiaries. With such a precedent on their side, unscrupulous lawyers and would-be heirs could overturn any testators expressed wishes by dissolving their life savings with legal fees or unintended inheritance judgments.
Rightful heirs who choose not to fight in court will forfeit the inheritance that their families intended for them, and their local and federal taxes will still be used to pay for the administrative costs of these assaults on the estates of others.
How did this happen? The case began about when Smith discovered that her husband had left her out of his carefully written will and estate plan. After consulting with attorneys including legal svengali Howard K. Stern, she challenged his will in a Texas probate court. After he died, she claimed that even though she’d specifically been left out of her husband's written will and estate plan, she—unbeknownst to anyone else—had been verbally promised a portion of his estate. After a probate trial in Texas lasting nearly six months, the jury ultimately ruled against her on all counts.
But Smith's legal team proved tenacious, and willing to subvert the system. Before the Texas verdict was issued, they leapfrogged to a federal bankruptcy court in California. There they were able to get their biggest win - nearly half a billion dollars - by convincing the bankruptcy judge to ignore much of the legal arguments, witness testimony and evidence that had been given in the Texas trial. A federal district court in California would subsequently reduce that win by three-quarters, and the 9th Circuit Court of Appeals threw out the remainder on appeal, saying that the entire dispute should not have been heard outside Texas.
In a successful appeal to the Supreme Court—which caught most court watchers off guard—her legal team won a narrow victory keeping the case on life support. Invoking a jurisdictional technicality the Supreme Court returned the case to the 9th Circuit in California for a second review, where it remains today.
The tactics and legal skirting that Anna Nicole’s legal team have employed could dramatically change how all families – billionaires to working class -- build and share wealth. As baby boomers look toward the future and begin planning how they will share their wealth within the complex modern family structure, they should also keep on eye on Marshall v. Marshall and what this decision could mean to them.
Despite its limited legal prospects, cases like Smith’s ultimately crowd out deserving cases, rack up hundreds of thousands in legal fees and set an attractive precedent for future abuse. Beyond the legal fees and the burden on the courts, however, the cost of this legacy will likely persist long after the last tabloid expose of Anna Nicole Smith is written.
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