Pennsylvania Estate Planning Lawyer & Attorney : Jakubik Law Firm : Serving Philadelphia, Chestnut Hill, Mt. Airy

The definition of the word "spouse" in the trust document of the late John Seward Johnson Sr. is at the center of a long court battle that now rests in the hands of the Supreme Court of New Jersey.

Mr. Johnson, son of the founder of the Johnson & Johnson pharmaceutical company of New Brunswick, N.J., created a trust in 1961 that was to be meted out to specific charities for 35 years and then divided among children, grandchildren and their spouses. He died in 1983 at age 87.

The final battle over the trust, now worth about $350 million, is whether surviving spouses — the widows and widowers of the children and grandchildren — are entitled to receive income from the trust.

A number of lawsuits had been filed over the years concerning who is eligible to receive funds from this trust. Many of those — including one brought by an illegitimate child, and others over whether divorced spouses should receive money from the trust — have been resolved.

Financial advisers and attorneys said that they are now looking more carefully at word choice as they draft estate documents as a result of spending years watching heirs battle over Mr. Johnson's will.

"Whenever a document says 'spouse,' you have an issue," said Sidney A. Blum, a certified financial planner with GreenLight Fee Only Advisors LLC of Evanston, Ill.

Andrew J. DeMaio, an attorney with Neff Aguilar Cox Magee & DeMaio LLC in Red Bank, N.J., has been following the Johnson case closely. Though he hasn't yet had to go back and change any previously drafted documents, the case has caused him to more closely examine documents that he's writing now.

"[The case] does affect how we do things," Mr. DeMaio said. "It makes you think about your current drafting and whether it's worthwhile being more specific to cover some of these contingencies."

Warren Racusin, an attorney with McElroy Deutsch Mulvaney & Carpenter LLP in Morristown, N.J., said that he has a few clients who are fond of their sons-in-law or daughters-in-law and want to name them in their wills.

But if the issue arises, he plans to point to the Johnson case.

"This is an object lesson that underscores what can happen," he said. "What it points to is [that] if people want to leave something to their in-laws, they have to think about it pretty long and hard because these issues are going to come up."

The issue is sticky particularly now that people divorce and remarry more than they used to, said Ruth L. Forehand, a certified financial planner with Financial Advisory Consultants LLC in Naples, Fla.

She said she specifically looks at the word "spouse" in wills, and asks clients if they understand that it may mean that their children's spouses will inherit a large sum in lieu of that money going to grandchildren. Many clients find that to be unacceptable.

"We'll write the language to say that if the direct heir dies, it should pass on to their children," Ms. Forehand said.

Even the attorneys involved in the Johnson case agree that using the word "spouse" in documents can lead to ambiguity.

"Words we take for granted today can have different meanings [tomorrow]," said Richard Collier, an attorney with Collier & Basil PC in Princeton, N.J.

"Look at the word 'marriage;' up until five years ago, it did not include same-sex marriage. In some cases it does, and in some cases it doesn't," Mr. Collier said.

"It's almost like when you draft a document, you'll need a glossary to say, 'This is what I mean by these words,'" he said.

Mr. Collier thinks that the Johnson case will mean that advisers and attorneys now will pay extra attention when they draft documents.

The remaining estate battle focuses on Mary Lea Johnson's widower, Martin Richards. Ms. Johnson was Mr. Johnson's daughter, and she was named in the 1961 trust.

She was married and divorced twice before marrying Mr. Richards, in 1978. The couple was still married when Ms. Johnson died in 1990, and he inherited about $40 million from a separate trust.

Mr. Richards contends that he is entitled to money from the 1961 trust.

Mr. Collier represents Roderick Ryan, a son of Ms. Johnson, who argues that Mr. Johnson didn't want surviving spouses to receive any inheritance.

Earlier court decisions found that Mr. Johnson had intended to include surviving spouses but not surviving divorced spouses.

The Supreme Court of New Jersey heard arguments on Sept. 25, and lawyers are hoping for a decision in December.

Mr. Richards has produced such Broadway shows as "Sweeney Todd" and "The Will Rogers Follies." He produced "Chicago," which won the Academy Award for best motion picture of 2002.

Mr. Richards filed a suit last year alleging that he was cheated by Miramax Film Corp., a New York-based division of The Walt Disney Co. in Burbank, Calif. It claims that the studio cooked its books and that he didn't get the proper profits from "Chicago."

Mr. Richards thinks that Mr. Johnson intended for surviving spouses to receive money from the trust, said Alan S. Naar, an attorney with Greenbaum Rowe Smith & Davis LLP in Woodbridge, N.J., who represents Mr. Richards.

"He made the spouses independent beneficiaries," Mr. Naar said. "There's no reason why he'd include them when the children are alive and then exclude them when they passed away."

Mr. Naar said that it is difficult to avoid battles such as this from occurring even when documents are carefully written.

"There are various scenarios that people just never envision," he said.

"There are a variety of issues that come up," Mr. Naar said. "Lawyers try to do the best they can, but they can't always predict the issues that come up later."

Source: Investment News