Legal battle over Simon estate plan puts big gifts in limbo

March 6, 2010

Billionaire mall developer Melvin Simon wanted to leave the Jewish Federation of Greater Indianapolis $10 million, but it could be up to his widow, Bren Simon, whether to fulfill that wish.

The Jewish Federation is one of 10 local or national organizations that together could receive $18.5 million from Melvin Simon’s 2009 estate plan.

Mel Simon Charities factsAmong those in line for a windfall from Simon’s estimated $2 billion fortune are Butler University, Congregation Beth-El Zedeck and The Children’s Museum of Indianapolis.

It’s not clear, however, whether the amounts designated will change, or whether they will be paid at all.

While earlier estate documents said Simon’s trustee “shall” distribute the gifts, the 2009 plan leaves Bren total discretion. According to the trust documents, Bren shall receive assets “with the request, but not the legal obligation” that she fulfill Melvin’s charitable wishes.

The charities appear to have no choice but to stand by for a year or more while a lawsuit seeking to throw out the 2009 plan plays out.

Deborah Simon, one of Melvin’s three children from his first marriage, sued in January, charging he didn’t understand what he was doing when he made the changes in February of last year, seven months before his death at age 82.

Bren, who married Melvin in 1972, contends the new plan reflects his wishes, and that he fully understood what he was doing.

Under the 2009 plan, Bren, 66, would receive half of Simon’s fortune outright, with the other half going into a trust paying her income the rest of her life.

The prior plan would have provided one-third to Bren outright. Another one-third would have gone into a trust paying Bren income during her lifetime, with his children receiving the remainder. The final third would have gone to charitable trusts that were to donate tens of millions of dollars a year to local and national charities.

The changes don’t appear to put into peril high-profile donations for which Melvin and Bren signed formal donor agreements that put the estate on the hook for contributions. Last month, attorneys for Bren at Krieg DeVault notified those recipients—including Indiana University and the Riley Children’s Foundation—that the estate will fulfill those commitments.

In 2006, the couple said they were giving $50 million to create the Melvin and Bren Simon Cancer Center and fund a faculty and research endowment. The next year, Simon family members, including Melvin and Bren, announced $40 million in gifts toward completion of a 10-story inpatient tower at Riley Hospital for Children.

Attorneys for Bren did not respond to requests for comment. Several organizations named in the 2009 estate plan either declined comment, or could not be reached.

Melvin and Bren Simon in 2007 agreed to give the Children’s Museum $1.2 million, but CEO Jeffrey Patchen said via e-mail, “The Children’s Museum considered its options and determined that not getting involved was the best course of action to take.”

The Children’s Museum’s agreement was with the Simons personally and with a charitable foundation that is not part of the estate.

It and other charities whose fates are uncertain are listed in an appendix to a trust that was revised as part of the 2009 estate plan. The appendix is slightly different from the one attached to the prior trust. It listed $18.9 million in contributions for a dozen organizations.

The revision eliminated $150,000 for the Indianapolis Zoological Society and $100,000 for the Association for the Cure of Cancer of the Prostate. It also reduced from $1 million to $500,000 gifts to the International Council of Shopping Centers, Urban Land Institute and United Way of Central Indiana.

Both versions list $1 million for Butler University. Butler officials are aware the university was named in Simon’s estate plan but have not received verbal or written commitmets, spokeswoman Courtney Tuell said.

The Jewish Federation did not return a phone call.

Beth-El Zedeck could receive $2 million for an endowed construction and maintenance fund. Although the congregation has a lawyer monitoring the suit, President Karl Smith said, “We are just not commenting on the matter at this time.”

Rob MacPherson, vice president of development at the Central Indiana Community Foundation, said that even if the charities had written pledge agreements, those are no guarantee of payment from the estate.

“The donor has the decision all the way up until the final [estate] documents are signed,” he said.

The only rock-solid guarantee, MacPherson said, would be if the pledge were to be paid from an irrevocable trust.

IU and its hospitals say in claims filed in Hamilton County court Feb. 12 that their agreements are irrevocable. Riley Children’s Hospital is counting on $12.5 million from Simon’s estate to pay for construction of the patient tower. The donation agreement calls for a charitable trust to make eight payments, starting one year after Simon’s death, Sept. 16.

The Indiana University Foundation said it still is owed $44 million of the $50 million the Simons pledged for the Simon Cancer Center and to set up the Joshua Max Simon Cancer Research Fund.

IU also is expecting $500,000 for Simon Hall, a science building on the Bloomington campus.•


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