June 21, 2019

What can we learn from Chris Cornell of Soundgarden about arranging provisions for your heirs?

Chris Cornell was the greatest singer of his generation (in my humble opinion). The power and emotion Chris poured into his performances took Soundgarden from a local Seattle grunge outfit to a worldwide phenomenon — the first grunge band to sign a major record deal and sales of over 25 million albums. His soaring vocals were also critical to Temple of the Dog and Audioslave, two of his other extremely successful projects. When Chris took his own life two years ago, he left behind a legion of loyal fans, a group of close friends, and a financial dispute that has turned into a legal one.

The financial dispute involving Mr. Cornell’s estate has the same two factors that show up in almost every argument involving wills and trusts: families and money. In this case, Mr. Cornell established a trust that was designed to pay his daughter’s “college and other” expenses. This trust was established in 2004 when Mr. Cornell divorced Susan Silver and the couple agreed to fund their daughter’s tuition in this fashion. Mr. Cornell’s daughter enrolled in college in 2018 and the trust paid tuition on her behalf last year, even though she dropped out of college one week into her second semester to focus on mental health issues. She did not inform the trustee of her decision to leave school and she recently filed a claim in Mr. Cornell’s probate estate seeking money for education and other expenses.

It is unclear why the administration of the trust is interacting with the probate filing, but what is clear is this: when you establish trusts for your children, you have the option to attach a variety of “strings” to the distributions. Had the trust provisions in Mr. Cornell’s case been a bit more broad (disbursements for her health, education, support, and maintenance, for example), then perhaps funds could be re-directed from her school tuition and put toward the care she is receiving for her mental health needs.

It is fairly common for parents to include provisions in their trust documents that plan for this sort of emergency need — many will specifically allow the trustee to re-direct trust funds from beneficiaries to treatment facilities for mental health or substance abuse. Similarly, many standard trust documents include provisions that contemplate the possibility that beneficiaries may become disabled at some future time, and arrange for the trust distributions to be altered so as to not affect the beneficiary’s ability to receive benefits from state or federal programs.

Finally, many trusts will provide for extra distributions to mark certain positive milestones in a beneficiary’s life. These distributions often allow extra funds for things like getting married, purchasing a home, and starting a business. These provisions are occasionally incentive-based, and can be set up so that the beneficiary receives more funds when he or she attains professional or educational milestones.

The most important variable in determining how a trust fund should be distributed is identifying the amount of money that will fund the trust. We talk with our clients about their current estate structure and about the amount of after-tax dollars likely to land in each beneficiary’s trust. Once we know this, then we bring an estate planning attorney in to provide additional expertise and model out how the flow of assets will work at death. Building and revising this plan helps to provide the context we need when deciding how money ought to be spent on our children when we are gone.

Mr. Cornell’s case appears to be one involving narrowly drafted planning documents. Please contact our team if you would like to discuss how this same sort of math would likely play out in your family. We’re happy to talk over some of the options so that you can be better informed when you meet with your estate planning team.