Bren Simon says in a new court filing that her late billionaire husband Mel Simon granted her a bigger share of his fortune in the last year of his life because of alarm over Simon Property Group’s plunging stock price and a sharp cut in its cash dividend.
“The changes in the trust and will ... reflected an effort to compensate for the fact that income Bren Simon would have received annually under the previous estate plan had been enormously reduced and protection was needed from future events which might similarly restrict cash flow,” the filing says.
The explanation is contained in legal papers Bren’s attorneys submitted Wednesday in Hamilton County in response to a will contest filed Jan. 7 by her stepdaughter, Deborah Simon.
Deborah contends that Melvin was suffering from dementia and even needed help signing his name when he executed the changes in February 2009. Bren’s filing contends the changes reflected Melvin’s wishes and he understood what he was doing. It acknowledges he needed help with his signature but attributed that to "Parkinsonian symptoms" affecting his right hand.
The revised estate plan boosted the share of Melvin’s fortune going directly to Bren from one-third to one-half. It also wiped out a share that was to go to Melvin’s three children from his first marriage—Deborah, David Simon and Cynthia Simon-Skjodt—and leaves charitable giving to Bren’s discretion. The prior plan specifically earmarked one-third of the estate for charity.
Melvin Simon, who died Sept. 16 at age 82, co-founded Simon Property Group and was one of Indiana’s richest men. Forbes magazine in March 2009 estimated his net worth at $1.3 billion. Shares of Simon Property Group, his principal holding, have zoomed higher since, perhaps pushing the value of his fortune past $2 billion.
But early last year, when Bren claims discussions on revising the estate plan began, the nation was in the grips of the economic crisis, and investors had grown especially bearish about real estate companies.
To conserve cash, Simon Property Group announced Jan. 30 that instead of paying its 90-cent-per-share dividend entirely in cash, it would pay 90 percent in stock and just 10 percent in cash.
By the time Melvin signed the new estate plan Feb. 13, Simon shares were trading at $38, down 70 percent from the all-time high reached in 2007. The stock fell as low as $24 the following month before rebounding. Shares now fetch about $75 a share.
Bren’s 24-page filing says Melvin also sought to increase her share of the estate because he was concerned that his three children from his first marriage might not act in her interests.
“It had become apparent to Melvin Simon that the children might not be fair or equitable to Bren Simon if the children were left with the ability to impact Bren’s financial situation or business interests,” the filing said.
Bren, 66, who married Melvin in 1972, already served as executor of the estate and as the trustee of a trust that was part of the plan—roles that gave her broad authority over her husband’s fortune.
However, in the filing she complained that David Simon, CEO of Simon Property Group, rebuffed her efforts to become a director of a family holding company, a role that would have given her influence over underlying investments.
“In addition,” Bren’s filing says, “Melvin Simon had seen firsthand the stonewalling and piecemeal responses to attempts by Bren Simon and her representatives to gain pertinent documentation regarding the true value and interests of the estate.”
An attorney with Ice Miller representing Deborah Simon declined to comment on Bren’s filing.
According to Deborah’s lawsuit, last year’s changes were out of step with a comprehensive estate plan for Melvin that had been in place more than a decade. That plan divided assets into these three equal portions:
— One-third going directly to Bren.
— One-third placed in a trust, with Bren receiving all its income during her lifetime. After her death, the principal would pass to Melvin’s three children from his first wife, Bess, and to Bren’s daughter from her first marriage.
— One-third going to charitable trusts that were to donate tens of millions of dollars a year to local and national charities. Anything remaining after a predetermined period would go to Melvin’s children.
Under the new estate plan, Bren would receive one-half of the estate outright, and the other half would go into a trust, with Bren receiving all its income during her lifetime.