Born in Fresno, Kirk Kerkorian was an Armenian-American who went on to become a wealthy businessman and philanthropist, known for his role in shaping development in Las Vegas.  After Kerkorian died in June 2015 at the age of 98, his last wife Una Davis filed a claim for a third of his large estate as an “omitted spouse.”

Early this year, the California Court of Appeal ruled in Estate of Kerkorian (2018) 19 Cal.App.5th 709 that Kerkorian’s executor, his longtime business associate Anthony Mandekic, could defend against Davis’ claim, more broadly clarifying when executors can participate in petitions to determine entitlement to decedents’ estates.

The Kerkorian Will and Estate

While most wealthy Americans create trusts to manage their wealth, Kerkorian apparently chose to dispose of his massive wealth by means of a will without any trust.

His estate, upon his death, was valued at over $2 billion.

The will he executed in July 2013 included approximately $40 million in specific bequests to several individuals, including Mandekic, with the hefty residue to pass to unidentified charitable organizations to be selected by a committee appointed in the will.  (It would be interesting to know if planned giving officers attempted to secure bequests from Kerkorian during his lifetime.)

In March 2014, Kerkorian (then age 96) married Davis.  Two days before the marriage, Kerkorian gave Mandekic $10 million with written instructions to give the money to Davis upon their marriage in place of any transfer that he might make to her upon his death.  Davis signed a waiver of marital rights in which she relinquished any right to inherit from Kerkorian.  Mandekic gave the $10 million to Davis.

Two months after marrying, Kerkorian and Davis separated.

When Kerkorian died a year later, Davis sought a third of his estate as an “omitted spouse” in that he did not provide for her in the will that he signed before marrying her.

Trial Court Permits Executor to Defend Omitted Spouse Claim

Under California Probate Code section 11704, Mandekic filed a petition in Los Angeles County Superior Court for leave to oppose Davis’ claim.

He claimed that there was good cause for him to do so because the charitable beneficiaries of Kerkorian’s will were not named, he had no remaining beneficial interest in the estate, and the burden of opposing the Davis’ petition should not fall on the State of California as would be the case if the California Attorney General took the lead in defending the petition.

Rather than seeking to play the lead in advocating on behalf of the unidentified charitable beneficiaries, the Attorney General supported Mandekic’s petition.

The trial judge agreed with Mandekic and Davis appealed.

Court of Appeal Affirms

The Second District Court of Appeal affirmed the trial judge’s ruling, providing the first published opinion in California on when “good cause” permits an executor to participate in litigation over entitlement to assets in a probate estate.

An executor’s role is to administer a will according to its terms and applicable law.  Hence, when it comes to favoring one potential beneficiary over another, the executor’s role generally is to remain neutral.  The California Legislature, however, provided in Probate Code section 11704 that an executor may participate in proceedings to determine entitlement to estate assets upon a showing of “good cause.”  It is up to the trial court to decide, in a particular case, whether the executor has good cause to get involved and to guide the level of involvement.

Good cause findings are reviewable by appellate courts for abuse of discretion, which is deferential.  Appellate courts will not reverse trial courts unless it clearly appears that there has been a plain abuse of discretion.

Faced with this high burden, Davis attempted to shift the appeal away from the good cause issue.  She argued that section 11704 required the executor to show that his participation as a party was “necessary to assist the court” and the trial court made no such finding.  The Court of Appeal rejected this argument, observing that a “probate court’s good cause finding necessarily subsumes its determination of the assistance that will be necessary” because the court cannot assess good cause to participate in the underlying litigation without “some notion of what form that participation will take.”

As to “good cause,” it is “relative and depends on all the circumstances.”  Given that Mandekic was personally familiar with Kerkorian’s estate and wishes, and he lacked any self-interest in the distribution of the estate, there was a solid basis for the trial judge’s conclusion that Mandekic’s defense of Davis’ petition would facilitate the expeditious resolution of the petition and distribution of the assets to the charitable beneficiaries.

Takeaways

Kirk Kerkorian’s smiling face graced an Armenian postage stamp in 2017 and his name also now lives on in a published California appellate opinion.

Whether a court will grant an executor’s request for leave to participate in estate entitlement proceedings will turn on the specific facts of the case, as “good cause” can only be determined in a particular context.  In Kerkorian, the circumstance that Mandekic had no beneficial interest in the will that would be affected by Davis’ petition was a key fact in support of Mandekic’s participation in the defense of that petition.

When there are unspecified charitable interests at stake, the position taken by the Attorney General also will be critical.  The Attorney General apparently had confidence in Mandekic’s ability to defend Davis’ petition and thus deferred to Mandekic.

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