Tom Clancy’s widow has won a major victory in the fight over his $86 million estate after a Baltimore City Orphans’ Court judge ruled the family trust established in the late author’s will is not liable for the payment of estate taxes.
Chief Judge Lewyn Scott Garrett on Friday granted Alexandra M. Clancy’s construction of the will, which would require the estate’s $11.8 million tax bill be paid out of the roughly $16.7 million trust left to Clancy’s four adult children rather than a family trust, of which Alexandra Clancy and the couple’s daughter are primary beneficiaries.
But Scott denied Alexandra Clancy’s motion to remove J.W. Thompson Webb, the estate’s personal representative, whose firm created the “inartfully drafted will.”
Webb, a principal at Miles & Stockbridge P.C. in Baltimore, along with lawyers for the estate, disputed Alexandra Clancy’s interpretation of the will.
“We’re very pleased with the thorough and well-reasoned opinion,” said Norman Smith of Nusinov Smith LLP in Baltimore, a lawyer for Alexandra Clancy, on Wednesday. (Smith is a member of The Daily Record’s Editorial Advisory Board.)
Tom Clancy died Oct. 1, 2013. His estate includes a 12 percent ownership stake in the Baltimore Orioles, valued at $65 million, and a World War II tank.
In September 2014, Alexandra Clancy filed a motion in orphans’ court asking that her late husband’s will be read so that no taxes should come from the two-thirds share of his estate divided into a marital trust and family trust.
There was no dispute that the remaining one-third share, established as a trust for the adult children, was liable for estate taxes.
Alexandra Clancy argued that the family residuary trust was intended to qualify for the estate tax marital deduction in addition to the marital trust established for her, and that any reduction caused by estate taxes would cause the trust to lose a portion of the marital deduction, according to court documents. She claimed Webb’s decision to pay taxes from the family trust would subsequently reduce the trust’s value by about $7.8 million, with the cost to her being $6 million.
Garrett agreed, citing a 2013 codicil which removed some of the language of the will which would have disqualified the family trust as a qualified terminable interest property, according to the opinion. The original will contained language making Clancy’s wife or daughter entitled to receive principal from the trust and also stated that the trust be terminated upon his wife’s remarriage but that language was removed or changed by the codicil.
Lawyers for the estate had argued while Tom Clancy specifically instructed his wife’s share of the estate not be responsible for paying taxes, there was no “similar or express carve out exception” for the remaining trusts.
A final decision of the Orphans’ Court may be appealed to the Court of Special Appeals or the circuit court, according to the Maryland Annotated Code. An appeal to the Baltimore City Circuit Court would be de novo.
Personal representative remains
Alexandra Clancy’s request to remove Webb as the personal representative stemmed from her desire to pursue a professional negligence claim against Miles & Stockbridge for the inadequate drafting of the will, according to the opinion. Under Maryland law, only the personal representative of an estate can sue the attorney who drafted the will.
Clancy’s original personal representative, the late Lowell R. Bowen, was also his longtime personal lawyer. Bowen, who died in 2011, appointed Webb as his successor.
State law allows for the removal of a personal representative upon a finding by the court that he is unable to perform his duties or has failed to perform a material duty without reason.
Garrett, in his ruling, found the construction of the will in Alexandra Clancy’s favor rendered the professional negligence claim moot and said the “court sees no reason” why Webb will not administer the estate in accordance with the law and the ruling.
Robert S. Brennan and Jennifer J. Coyne of Miles & Stockbridge, lawyers for the Clancy estate, did not return calls for comment Wednesday.
Shiela K. Sachs, an attorney at Gordon Feinblatt LLC in Baltimore, who represented Tom Clancy’s adult children, was not immediately available for comment Wednesday.