While Disneyland may be the “Happiest Place on Earth,” a California probate court may be the opposite for a Disney heir, mused the U.S. Court of Appeals in Lund v. Cowan (9th Cir. 2021) ___ F.3d ___. Bradford Lund, a 50 year-old grandson of Walt Disney, sued the probate judge who rejected a settlement agreement that would have allowed him to access his approximately $200 million inheritance, and the federal appellate court affirmed the dismissal of the suit.
The real drama has played out in the probate department of the Los Angeles County Superior Court. Litigation there has spanned 15 years with no FASTPASS or end in sight. Bradford’s story is unlike any Disney movie we have seen, but equally entertaining.
The Disney Family Cast of Characters
According to an article from the Hollywood Reporter, Walt Disney and his wife Lillian had two children, a biological daughter named Diane Disney Miller and an adopted daughter, Sharon Disney Lund. Walt reportedly came up with the concept for Disneyland while watching Diane and Sharon ride the merry-go-round at Griffith Park in Los Angeles.
Sharon adopted her first daughter, Victoria, during her first marriage. After her divorce, she married William “Bill” Lund, and they had two children in 1970, twins Bradford and Michelle. Bradford and Michelle each had learning disabilities growing up, according to the Hollywood Reporter article. Bill described Bradford as having Down syndrome and fetal alcohol syndrome. Michelle was diagnosed with dyslexia.
Sharon’s three children – Victoria, Bradford and Michelle – were named beneficiaries of several Disney trusts through their mother’s inheritance. In 2014, these assets were valued at approximately $400 million dollars.
Bill divorced Sharon in 1977 and eventually re-married Sherry Lund.
Sharon died in 1993. Victoria died without children in 2002 and the balance of her trust was added to the principal of the trusts for Bradford and Michelle.
When Is a Beneficiary “Mature” Enough to Inherit?
After Sharon died, three separate residuary trusts were created, one for each of her children. Each trust had three individual trustees and one corporate trustee. The trustees have changed over the years, including Sherry Lund, Bill Lund, and Sharon’s older sister, Diane Disney Miller.
The trustees were required to pay the beneficiaries a yearly income payment.
Separately, the trustees were allowed to make distributions to the beneficiaries when each reached the ages of 35, 40, and 45. Each of these birthday distributions was close to $30 million.
However, the trust instrument gave the trustees a discretionary withholding power with respect to the birthday distributions. According to the Hollywood Reporter article, the trust said that the trustees “shall have the power to withhold any such distribution in the event that the Trustees, in their discretion, determine that the child has not theretofore demonstrated the maturity and financial ability to manage and utilize such funds in a prudent and responsible manner.” In the event of such a withholding, the trustees “may subsequently make such distribution, or a portion thereof, if the Trustees later determine that the child has met the required standard.”
“Frozen” Out of the Trusts
The discretionary distribution power has caused great strife.
In 2005, on Bradford and Michelle’s 35th birthday, the trustees exercised the discretionary power for the first time. Bradford got nothing. Michelle, according to Brad, received approximately $35 million.
In 2010, on Bradford and Michelle’s 40th birthday, the trustees again exercised their discretionary power. Bradford got nothing and the trustees refused to revisit the decision made at his 35th birthday. Michelle received her share.
On both occasions, the trustees withheld distributions on the basis that Bradford lacked the mental and financial abilities to manage such a fortune.
Michelle received the distributions even though she reportedly had a history of drug addiction and a brain aneurysm that left her with uncertain mental abilities. Similarly, prior to her death, Victoria received a distribution on her 35th birthday even though she had issues with heroin use and led an extremely lavish lifestyle.
According to the Hollywood Reporter article, Bradford’s lawyers argued that the trustees were trying to take control of the children’s inheritance altogether. For example, the trustees tried to seek a conservatorship over Michelle, move her to a facility in Arizona, and also sought to prolong the administration of the trust in order to get paid hefty trustee fees. The probate court was not persuaded by these arguments, and affirmed the unequal distributions to the twins.
Effectively, Bradford was “Frozen” out his inheritance. He felt that the trustees were “keep[ing] [his] trust hostage, and they refuse to hand me over what is legally and rightfully mine.”
Saga Escalates to Federal Court
Not surprisingly, in 2015, on Bradford and Michelle’s 45th birthday, Bradford again was denied a birthday distribution. By then, his distributions would have totaled an estimated $200 million.
Bradford challenged the trustees’ refusal to distribute his share. The parties engaged in mediation and reached a global settlement agreement. They then approached Judge David Cowan of the Los Angeles Superior Court to approve the settlement.
During the settlement conference, Judge Cowan said, “Do I want to give 200 million dollars, effectively to someone who may suffer, on some level, from Down syndrome? The answer is no.” The judge rejected the settlement and appointed a guardian ad litem, without holding a hearing, to look out for Bradford’s interests.
Bradford initiated a federal lawsuit in the U.S. District Court for the Central District of California. He claimed that Judge Cowan violated his rights, including those under the Americans with Disabilities Act. The district court dismissed the complaint, and the Ninth Circuit affirmed the dismissal because Judge Cowan could not be liable under the doctrines of sovereign and judicial immunity.
A YouTube recording of the Ninth Circuit argument, which we unofficially rate as “G,” can be seen here.
In its opinion, the Ninth Circuit did “find Judge Cowan’s comment troubling. That someone has Down syndrome does not necessarily preclude the ability to manage one’s own financial affairs. In any event, the record suggests that Lund does not have Down syndrome. But judicial immunity shields even incorrect or inappropriate statements if they were made during the performance of a judge’s official duties.”
Back to Probate Court
With the loss of his appeal to the Ninth Circuit, Bradford finds himself once again in probate court, hoping to get his hands on his $200 million inheritance. His “California Adventure” continues.
The question remains whether Bradford has the mental capacity and the maturity to manage his $200 million fortune. An Arizona court found that Lund is “not incapacitated” and a California court determined that he has capacity to choose new trustees. There is also DNA evidence he does not have Down syndrome and evidence that Bradford held several jobs, suggesting that he has the capacity to handle the fortune like his sister, Michelle.
Depending on the positions taken by the trustees and the probate court, Bradford might receive substantial distributions in the future.
Another Example of Fiduciary Abuse?
Bradford’s tale draws further attention to the possibility of abusive fiduciary relationships in the context of massive fortunes. As discussed in a prior post, Britney Spears and Netflix have led to scrutiny of conservatorships. Bradford’s situation, though not involving a conservatorship, also involves loss of control over wealth.
Bradford has already taken steps to draw more attention to abusive fiduciary relationships, by writing to the House Judiciary Committee to investigate corrupt fiduciaries for depriving beneficiaries of due process.
As the probate battle continues, let’s hope that Bradford gets some time away from the “Unhappiest Place on Earth” to enjoy his grandfather’s famous theme park or catch his favorite Disney film.