In Act III, Scene i of Shakespeare’s Hamlet, Hamlet gives his famous soliloquy beginning with “[t]o be or not to be: that is the question” where he ponders the morality of suicide. Donald and Shelly Sterling are not contemplating the lofty issue of life versus death at this time, but the financial issue of who has the authority to sell the NBA Los Angeles Clippers basketball franchise. This is the question that Shelly posed to the Los Angeles Superior Court this past week over Donald’s objections. In response, the Court has set this matter for a four day trial to begin on July 7, 2014.

Donald Sterling purchased the San Diego Clippers basketball team in the early 1980s for $12.5 million. Ownership of the franchise (that was subsequently moved to Los Angeles) is held in the Sterling Family Trust, a trust created by Donald and Shelly as part of their estate plan. Donald and Shelly designated themselves to serve as the Co-Trustees of the Trust. According to Shelly’s lawyer, Pierce O’Donnell, as reported in USA Today, the Sterling Family Trust provides that if one of the Co-Trustees of the Trust is lacking mental capacity, the other Co-Trustee will become the sole Trustee to make all decisions with respect to the Trust’s assets. The Trust requires that two doctors confirm the lack of mental capacity of a currently serving Co-Trustee before that Co-Trustee may be removed from this position.

In May of this year, Donald was evaluated by two prominent physicians, Dr. Meril S. Platzer, a neurologist, and Dr. James A. Spar, a geriatric psychiatrist. Both doctors concluded that Donald suffers from mental impairment and that he does not have the cognitive ability to function as a Co-Trustee of the Trust.  Based on these medical opinions and the imminent threat that the NBA might seize the franchise and sell it at auction, Shelly assumed the role as the sole Trustee of the Trust to sell the franchise. On May 29, 2014, Shelly negotiated the sale of the franchise to former Microsoft CEO Steve Ballmer for $2 billion, subject to the approval of the NBA.

Donald has claimed publicly that he does not want to sell the franchise and is now attempting to block the sale. Donald’s attorney has asserted that Shelly does not have the authority to negotiate the sale alone on behalf of the Trust because both Co-Trustees, Shelly and Donald, must consent to the sale. Donald’s attorney plans to present evidence during the probate court trial in July showing that Donald does not lack mental capacity (which will require him to rebut the medical opinions of Drs. Platzer and Spar), that both Shelly and Donald are still the Co-Trustees of the Trust, and that both must authorize the sale of the franchise for the sale to be valid.

The provisions in the Sterling Family Trust for the removal of an incapacitated Trustee are typical provisions in trusts. In most cases, the removal of an incapacitated Trustee takes place seamlessly with little to no fanfare. But in some cases, including this matter with the Sterlings, the person serving as Trustee does not believe that he or she lacks capacity. When this happens, the probate court must be involved to make the final determination based on the evidence.

Sources: USA Today Article 6-11-14, ESPN Article 6-11-14

If you would like to discuss this or other trusts and estates issues, please contact the attorneys at Drucker Law Offices, 468 North Camden Drive, 2nd Floor, Beverly Hills, CA 90210, 310.285.5375 Tel, 310.444.9754 Fax, www.druckerlaw.com