A new fight has broken out between Mel Simon’s widow and her stepchildren—this time over whether to divvy out a chunk of his multibillion-dollar fortune before a full appraisal of his assets is completed late this year.
Bren Simon is pushing hard for a distribution now, citing as precedent an Indiana Court of Appeals ruling in another case that “as a matter of policy, beneficiaries should not be starved of distributions to which they are undisputably entitled.”
Mel’s surviving children from his first marriage—Deborah Simon, Cynthia Simon-Skjodt and David Simon, the CEO of Simon Property Group Inc.—are pushing back just as hard.
“Bren’s proposal for a hasty and ill-advised distribution is nothing more than an attempt to circumvent both the trust agreement and settlement agreement, and it would greatly complicate trust administration and force the trustee to violate his fiduciary duties,” attorneys for the children said in a filing.
The nitty-gritty of the dispute isn’t entirely clear, since the settlement the parties reached last December resolving their three-year fight over Mel’s fortune is under seal, and the recent filings over whether to make an early distribution are heavily redacted.
But public portions of the filings include language from both camps accusing the other of scheming to get more than their fair share of Mel’s roughly $3 billion fortune.
The tussle appears to focus on who reaps the benefit of the hefty quarterly dividends issued by Simon Property Group, whose shares were Mel’s biggest asset. The estate holds roughly 10 million shares, which generate more than $11 million in dividends each quarter.
Keeping those shares in the estate increases the size of the pie, benefiting all the beneficiaries—from family members to local and national charities. But if Bren gets her stock now, the dividend cash flows only to her.
“Bren is advocating a plan that is nothing more than a naked attempt to seize additional … income to which she is not entitled,” attorneys for the children wrote. “Were that not true, Bren would have no real objection to permitting [assets] to be valued over the next few months and having the trustee distribute billions by the end of the year.”
On the other hand, Bren, 70, who was married to Mel for 37 years, asserts in a court filing that her stepchildren’s opposition to a distribution now “is not surprising, because each day that passes without the allocation and distribution of assets enhances their financial position.”
Attorneys for Bren argue that it would not be a big deal for the trustee overseeing the estate to do a “true-up” once final appraisals are in, “and such true-ups are common and not particularly complicated.”
But attorneys for the stepchildren argue that doling out distributions before some assets have even been valued would be sure to spur additional litigation when it was time to straighten out who really was owed what.
Further, they argue, such a drastic step is entirely unnecessary given the relative speed with which the estate’s affairs are being wrapped up.
All assets, aside from a reserve, may be distributed by the end of the year, attorneys for the stepchildren wrote, “which would be astounding for a $3 billion trust of this complexity.”
Caught in the middle is the trustee, retired Indiana Supreme Court Justice Ted Boehm. In June, he asked Hamilton Superior Court Judge William Hughes for guidance on how to proceed. Hughes asked the two sides to submit their arguments in writing, and has scheduled a hearing for Sept. 12.
Boehm declined to comment, and attorneys representing parties in the dispute either would not comment or did not return calls.
The latest acrimony is not surprising, given the family divisions that were exposed during the months of wrangling leading up to the settlement. In an email quoted in court, Bren said of the three siblings: “I hope they rot in hell.”
The siblings had argued that Mel, the co-founder of Simon Property Group, didn’t know what he was doing and was suffering from dementia when he signed a new estate plan in February 2009, seven months before his death at age 82.
Bren argued Mel adopted the new plan—which sharply increased her share of his fortune and wiped out a portion going to the siblings—because he wanted to compensate for the negative effects of the financial crisis, which had shrunk the value of Simon Property shares and caused the company’s board to sharply reduce the cash dividend.
A stunning surge in the value of Simon shares after the crisis ultimately created so much additional wealth that the two sides were able to set aside their animosity and negotiate a deal. Simon shares have increased sixfold from their low during that crisis and now fetch about $162 apiece.•