Attorneys for Bren Simon’s stepchildren argued on Thursday that she is so incapable of serving as trustee of her late husband’s estate that she failed to take even the basic step of hiring a financial adviser to manage the fortune.
The charge came during a hearing in which her attorneys made final arguments to fend off a challenge from her stepchildren over whether she is fit to remain as trustee over Melvin Simon’s roughly $2 billion estate.
Bren did not attend the hearing in Hamilton Superior Court.
Melvin, who died in September 2009, co-founded Indianapolis-based Simon Property Group Inc., the nation’s largest shopping
Specifically, attorneys for the stepchildren took aim at $500 million worth of Simon stock Bren has been trying to unload since her husband's death. The publicly traded company declined to immediately convert the ownership units into common stock that could be easily liquidated, citing a challenge to the will.
Attorneys for Deborah Simon, who attended the hearing, pointed out the shares have grown in value by tens of millions of
dollars since then.
“Ten months after Mel’s death, there’s no financial manager, no diversification [of assets],” said Barry Simon, who is not related to the Simon family.
Deborah’s attempt to get Bren removed as trustee of the estate is part of an effort to challenge her father’s will. A jury trial in the case is tentatively scheduled for September 2011.
Judge William J. Hughes on Thursday took the arguments to remove Bren as trustee under advisement and will rule at a later date.
But before he did, Hughes took to task lawyers on both sides as they wrapped up arguments.
Hughes questioned Barry Simon’s request to assign a corporate fiduciary to the trust to replace Bren when there are few assets presently moving through it.
“Which one, who doesn’t already have a conflict?” Hughes asked.
His most pointed exchange during the afternoon, however, came with one of Bren's attorney, Michael Ciresi.
Ciresi argued Bren has no reason to hire a financial adviser to oversee $500 million in Simon shares she wants to sell, until she needs to reinvest the money.
“So what do you do [with the money]?” Hughes asked. “Put it in a bank?”
Ciresi maintained that his client is unsure what she will do, but putting the money temporarily in U.S. Treasuries is a possibility.
“It would be darn hard to find an adviser in this country who would say to immediately invest $500 million,” Ciresi argued. “Getting a handle on all the assets has been a horrendously difficult job.”
The judge also grilled Ciresi about a $14 million advance Bren took from the trust to pay her private counsel.
Hughes said state law requires a trustee to get approval from a court and trust beneficiaries before a loan can be given, and “I don’t think there’s evidence of the two.”
Ciresi said he thought Indiana law gave Bren the right to take the advance.
“It’s not whether it can be done,” Hughes said, “it’s how it was done.”
Ciresi portrayed the mistake as “inadvertent.”
“If you want to direct the consequences at anyone, direct them at me,” he told the judge.
Deborah contends her father was suffering from dementia near the end of his life and didn’t understand what he was
doing when he revised his estate plan, boosting the share of his fortune going directly to Bren from one-third to one-half.
The changes also wiped out a portion that was to go to Deborah and siblings Cynthia Simon-Skjodt and Simon Chairman and CEO David Simon from Mel’s earlier marriage, and left charitable gifts stipulated in prior versions to Bren’s discretion. Bren, who married Mel in 1972, contends the changes fully reflected his wishes.
In a court hearing earlier this month, Deborah’s legal team played portions of videotaped testimony from Bren, taken in March, in which she describes Deborah and her siblings as spoiled, vicious and hurtful.
In e-mails entered into the court record, Bren calls Deborah “bin Laden” and describes the actions of David as “terrorism.”