Billionaire Ron Perelman is being accused of spending up to $30 million in legal fees from his daughter’s inheritance defending unsuccessful lawsuits against his former in-laws. After the death of Perelman’s second ex-wife, Claudia Cohen, he was appointed the “executor” of her estate, which in Florida, is referred to as the “personal representative” of an estate. Their daughter, Samantha, was named the beneficiary. Claudia Cohen was the daughter of Robert Cohen, who created the Hudson County News Company, which operates a chain of newspaper and magazine retail stores. Perelman claims that Claudia’s father and brother cheated Samantha out of a share of the family’s lucrative media business and filed at least four lawsuits after Claudia’s death. The Cohens claimed that Perelman just wanted to obtain part of the $80 million divorce settlement that he lost to Claudia and that Claudia had a great relationship with her family. As proof of that, the Cohens contended that Claudia’s will expressed her love for her parents, brother, and sister-in-law and her desire for her parents to have liberal visitation time with Samantha.
Thus far, Perelman has lost all four lawsuits and has appealed two of them. One cost him a $13 million judgment against Claudia’s estate in a counter-claim by Robert Cohen. Additionally, Perelman’s attorneys were fined $1.9 million for frivolous litigation in one of the lawsuits. Due to these expenses, James Cohen, Claudia’s brother, and his two sons obtained a ruling in Manhattan Surrogate’s Court in 2011 requiring Perelman to provide an accounting of the estate’s assets. Perelman, however, has yet to comply with the order.
In Florida, a personal representative is a fiduciary who has to observe the standards of care applicable to trustees. Fla. Stat. § 733.602(1). A personal representative has a duty to distribute the estate in accordance with the terms of the decedent’s will and relevant Florida statutes as quickly and efficiently as possible while still acting in the best interest of the estate. Id. The personal representative must “take all reasonable steps reasonably necessary for the management, protection, and preservation of the estate until distribution and may maintain an action to recover possession of property or to determine the title to it.” Fla. Stat. § 733.607. Additionally, a “personal representative, acting reasonably for the benefit of interested persons, may properly prosecute or defend claims or proceedings in any jurisdiction for the protection of the estate and of the personal representative. Fla. Stat. § 733.612(20). But, if the personal representative breaches their fiduciary duty, they are personally liable to all interested persons for the damage of loss resulting from that breach. Fla. Stat. § 733.609.
On October 3, 2013, a New Jersey appeals court upheld a ruling by a lower court that Perelman’s challenge to his father-in-laws estate, made by Perelman in his capacity as executor of his ex-wife’s estate, was frivolous and a breach of Perelman’s fiduciary duty as the executor of the estate. However, the appellate court also found a $2 million fine against Perelman’s lawyers to be too harsh and ordered that the lower court reconsider the amount of the fine.
If you or someone you know has questions about an executor or personal representative and their duty to the estate and interested persons, please to not hesitate to contact the law offices of Chepenik Trushin LLP. The experienced attorneys at Chepenik Trushin are ready, willing, and able to assist with your estate planning needs. Please feel free to contact us for an initial consultation.