June 1, 2010

The Brooke Astor Case: “An Appalling Set of Circumstances” An Interview with Expert Witness Alex Forger

Editor’s Note: On October 8, 2009, a New York City jury convicted Anthony Marshall, the  85-year-old  son of the late philanthropist Brooke Astor, on 14 of 16 counts for financially exploiting his mother by first-and second-degree grand larceny, scheme to defraud, possession of stolen property, offering a false instrument,  and  conspiracy.  Lawyer Francis Morrissey was convicted of 5 of 6 counts, including conspiracy, scheme to defraud, and forgery. To see the New York Times’ chart specifying charges, allegations, and verdicts against each defendant, visit www.nytimes.com/ imagepages/2009/10/08/nyregion/09astorg.ready.html.

Renowned 86-year-old New York lawyer Alex Forger, who practiced trusts and estates (T&E) law for 42 years and chaired the ABA Commission on Law and Aging (COLA) from 1993–1995, testified as an expert witness for three days of the five-month trial. Assistant district attorney Elizabeth Loewy, head of the elder abuse unit in the Manhattan district attorney’s office and one of the case’s three prosecutors, described Forger as “a lion of the bar” and “incredibly generous with his time.”

Forger continued his generosity by opining  about  the lessons that lawyers who represent older persons should learn from this case with COLA Senior Attorney Lori Stiegel. Forger explained how he became involved in the case, why he did it pro bono, how he prepared, and the ways in which  Mrs.  Astor’s  long-standing estate plan was changed by the events in question.

This interview was originally published in the December 2009, February 2010, and April 2010 issues of Bifocal, Journal of the ABA COLA. Parts 1 and 2 are combined here and reprinted with permission. Part 3,   to be reprinted at a later date, will delve further into the roles of the lawyers involved and provide Forger’s thoughts on how lawyers can protect their clients—and themselves—in similar situations. To access current  and past issues of Bifocal or to obtain more information on elder abuse and other topics older persons, visit the COLA Web page at www.abanet.org/aging.

Lori Stiegel: How did you come to be an expert witness in the Astor case?

Alex Forger: I met with the three assistant district attorneys in January. I had been aware of the indictment and the scheduled trial. They explained that much of the evidence would relate to T&E practice—powers of attorney, wills, codicils, and standards of practice. Not being T&E practitioners they realized that they would need some assistance and thought the jury also would probably need help in understanding the terms, the various documents, and their consequences. I said I would reflect on their request. As I read some of the material relating to the trial, including depositions, I concluded that this presented an appalling set of circumstances, but to reach a full understanding would require considerable interpretation and explanation to enable anyone not familiar with T&E law to comprehend the issues and why what was alleged to have been done was inappropriate. So I agreed to help.

Stiegel: Why did you decide to do it pro bono?

Forger: I believe it was the fact that I’ve been urging lawyers to do more pro bono work. I think it is part of professional responsibility. If the government requests that you give assistance I think that you ought to do that. My motivation wasn’t compensation—which I refused— but simply to help in this case, which I thought was important as it affected the legal profession.

Stiegel: What did you do to prepare for your testimony? Forger: Mrs. Astor signed her first will in 1952. I read and analyzed the 32 wills that she executed over the ensuing period of nearly 50 years, as well as the seven codicils, the last two being the ones prepared by her new attorney and signed in 2002. These two codicils were at the focal point of the trial. In addition, I read powers of attorney, letters, memos, and thousands of pages of trial testimony preceding my own testimony. I became quite familiar with her estate plan as it evolved over 50 years. Analyzing the various components of the instruments, understanding the nature and extent of her property and the consequence of taxes was part of the basic preparation.

Stiegel: Do you have a sense of how much time that took?

Forger: I would say many hundreds of hours; I didn’t keep track of it. Then, as the testimony went forward, I must have read some 12,000 or 13,000 pages of testimony, particularly focusing on the testimony of the lawyers. [Note: Forger is referring to Henry Christensen, then of Sullivan & Cromwell, who had been Mrs. Astor’s T&E lawyer for many years and who prepared the first codicil, and to Warren Whitaker, of Day Pitney, who prepared the second and third codicils after Christensen was replaced.]

Stiegel: What is the current status of the case?

Forger: Anthony Marshall was convicted on 14 of 16 counts, including scheming to defraud and first degree grand larceny. The first degree grand larceny count carries a mandatory prison sentence of at least one year. Francis Morrissey was convicted on five counts, including conspiracy and forgery.

In December each was given a one-to-three-year prison sentence. In early January a justice of the New York Appellate Division allowed both defendants to remain free on bail while the case is appealed. The defendants have stated that their issues on appeal are:

  1. The judge’s failure to interview one juror following a report that she felt coerced or threatened by one or more of the other jurors.
  2. The judge’s instruction, deemed prejudiced, relating to Marshall’s use of the power of attorney.
  3. The judge’s ruling allowing me to testify as an “expert witness.” During trial, the defendants contended that no such witness was required or appropriate, as my testimony would usurp the function of the judge. My role as prescribed by the judge was to testify as to the pattern of Mrs. Astor’s estate planning (working through the maze of some 38 testamentary instruments and lifetime transfers) and as to customary practice standards—not touching on legal ethics.

It is my opinion that the appeal will likely extend over a lengthy period of time, being heard first in the Appellate Division and thereafter in the Court of Appeals.

Stiegel: In order to understand the issues in this case, perhaps it would be helpful if you provided a summary of the assets and estate plan of Mrs. Astor at or about the time of the execution of the second and third codicils in 2004.


Forger: Mrs. Astor’s estate was valued at $180 million (hereafter abbreviated as M). It included a marital trust of $60M created by the will of her late husband, Vincent Astor. His will provided that the income from the marital trust was payable to Mrs. Astor and on her death the principal was to be distributed as she determined by exercise of a power of appointment. Throughout the years since Vincent Astor’s death in 1959, Mrs. Astor’s estate plan had appointed the principal to charity. The remainder of her estate ($120M) was to be distributed as follows:

  1. Real estate of $40M, bequeathed to Marshall (who would be obliged to pay about $20M in estate taxes on that property).
  2. Tangible property of about $5M, of which $4M was bequeathed to Marshall and the balance to others, including his wife Charlene Marshall, who was to receive one or two pieces of jewelry and two coats.
  3. Approximately $75M of liquid assets providing a cash legacy of $5M to Marshall, close to $3M in other bequests, and a residue of roughly $67M. Of that $67M residue, about $37M would be paid in taxes (in addition to the $20M mentioned above), leaving $30M in a charitable remainder unitrust that provided that Marshall would receive 7 percent per year until his death and then the principal would be given to charities that Marshall would select. All bequests to Marshall were made on condition that he survive Mrs. Astor.

Her will named Marshall and her lawyer, Terry Christensen, as executors and trustees. Marshall could not name a successor to himself.

Stiegel: What was the effect of the second and third codicils on Mrs. Astor’s estate plan and on the principal participants in the case?

Forger: Mrs. Astor’s estate plan, which had been in effect for years, was materially changed—charity lost out and the principle participants benefited.

The second codicil, which was executed on January 12, 2004, made the following changes to the will it revised:

  1. It eliminated the charitable remainder unitrust and gave the $30M residuary outright to Marshall. It had been years since Marshall had been given any part of his mother’s estate outright except for real estate, a cash legacy ($2.5M earlier, but increased to $5M in her latest testamentary instruments), and some tangible property.
  2. Marshall was named sole executor with the right to appoint successor and co-executors. He had never been named sole executor and never had theauthority to appoint successor or co-executors in any of Mrs. Astor’s estate plans.
  3. Charity’s remainder interest was eliminated. Moreover, if Marshall failed to survive his mother, the residuary was given to his estate; this meant that he could give the residuary to whomever he designated in his will. Mrs. Astor’s prior estate plan provided that if he died before his mother virtually her entire estate of close to $120M, in addition to the $60M marital trust, would be given to charity.

The third codicil, dated March 3, 2004, had the effect of increasing Marshall’s inheritance while decreasing the amount charity would receive because:

  1. It created some $5M of additional administrative expense by relieving Marshall of the costs to be incurred in selling the real estate (which he intended to do). This was to be accomplished by eliminating the specific legacy to him and, instead, causing the executors to sell the property. As the proceeds of the sale would be part of the residuary there was no reduction in the overall amount Marshall would inherit (approximately $54M), but he would avoid having to pay personally the expenses associated with the sale (maintenance until title was transferred; “flip tax”; New York City and state transfer taxes; brokerage commission; etc.). Under Mrs. Astor’s 2002 will and several earlier wills, administration expenses were to be paid out of the marital trust, so this change reduced the amounts to be received by charity, but not by Marshall.
  2. Additionally, the sales proceeds would become subject to executors’ commission, which would not have occurred before when it was Marshall’s individual responsibility. This meant that approximately $1.6M would be payable to Marshall, Charlene Marshall, and Morrissey—the latter two having been named by Marshall as co-executors under the authority granted him in the second codicil. This $1.6M also was an administrative expense to be paid by the marital trust, further reducing the amount to charity.

Stiegel: Please go into more details about the principal participants in the case and how they were involved in or benefited from the second and third codicils.

Forger: Anthony Marshall

Then age 79 or 80, Anthony Marshall was Mrs. Astor’s son from her first marriage. For many years mother and son did not have a close relationship though they may have grown closer in her last years. He was a Marine at Iwo Jima and an ambassador to a number of small countries during the Nixon Administration to which Mrs. Astor was a major contributor. For over 25 years up to the time of execution of the questioned codicils he was employed by his mother to oversee her investments. He also was interested in theater, had several successful productions, and won a Tony Award. He married Charlene in 1992. Mrs. Astor had always provided very substantial financial benefit for Marshall in her estate planning for over 40 years, primarily assuring him of a flow of income for his life. Over the 30 years up to and including her last will in 2002, Marshall was to receive residuary trust income for his life. In the last ten years this was manifested as a payment of 5 percent—subsequently increased to 7 percent—from a unitrust, payable to charity on his death. This trust income was in addition to the pre-residuary legacies he would receive.

Before the residuary trust was eliminated by the second codicil, he would have received an annual payout estimated to be slightly more than $2M on the $30+M trust that was to be paid over at his death to such charities as he selected. If he predeceased his mother, his estate would receive nothing and her estate, valued at some $120M (excluding her marital trust under Vincent Astor’s will—valued at about $60M—which was always to go to charity) would be given to charity. Mrs. Astor in 2003, a year before the codicils in question, had given Marshall her estate in Maine, as well as a cash gift of

$5M so as to have enough, in her opinion, to enable him to take care of Mrs. Marshall.

The second and third codicils increased substantially the benefits he would receive from the Astor estate (approximately $54M outright) whether or not he survived his mother. He now had the certainty of ample funds to “take care of Charlene.”

 

Francis Morrissey

Francis Morrissey had befriended Mrs. Astor quite a few years before the codicils and was known to Marshall for many years. Morrissey escorted Mrs. Astor to some social events, accompanied her to the theater and dinners. He was referred to as a trust and estate lawyer, though according to Warren Whitaker, the lawyer who prepared the second and third codicils, Morrissey did not do much trust work but mostly conferred with clients and gave “strategic advice.” So far as was known Morrissey spent time with Mrs. Astor, particularly during the period in 2004 when her long-time lawyer was removed and the changes to her estate planning occurred. He contacted Warren Whitaker in December of 2003 saying that Mrs. Astor was dissatisfied with her current counsel (Terry Christensen, discussed below) and wished to engage someone else to revise her will. Morrissey apparently had called on Whitaker to do some drafting for Morrissey earlier in the year for another client of his. It is not known whether Whitaker was aware of Morrissey’s professional history, as it could not be mentioned during the trial. However, the New York Times published an article in 2006 reciting a number of will contests in which Morrissey had been involved, presumably as the decedent’s lawyer, legatee, and/or fiduciary, and aided in most instances by an outside lawyer, whom he retained to do the drafting. Each case apparently had been settled and confidentiality agreements often entered into. Also, Morrissey had been suspended in the mid-1990s from practice in New York for two years for unprofessional conduct. After the second codicil Morrissey entered into an agreement with Warren Whitaker to split equally the estimated $3.6M legal fee in representing Mrs. Astor’s estate upon her death. In addition, he would become an executor and share in an estimated total commission of $4.8M. [Note: The Associated Press and several newspapers reported on February 18 that Morrissey had been automatically disbarred due to the convictions in the Astor case.]

 

Warren Whitaker

Warren Whitaker was a recognized expert in trust and estate practice who, when he was asked by Morrissey to draw up the second codicil, was a partner in the firm of Day Berry & Howard. It was not immediately clear from the evidence whom Whitaker was to represent. Morrissey was then representing Mrs. Astor, as well as Marshall, as was Christensen until he was later informed that he had been replaced. No retainer agreement was executed. Whitaker responded to Morrissey, with whom he later entered into an agreement to become co-counsel to Mrs. Astor’s estate. In the interim, his firm would become counsel to Marshall and to Mrs. Astor. He had neither met nor had any communication with Mrs. Astor until he supervised the execution of her second codicil.

 

Charlene Marshall

Charlene Marshall was not a party to the proceedings, but was very much a factor in the case. There apparently was little warmth in Mrs. Astor’s relationship with her, stemming in part perhaps from the fact that Mrs. Marshall, who was the wife of Mrs. Astor’s minister in Maine, divorced him and thereafter married Marshall. In her will Mrs. Astor gave Mrs. Marshall a piece or two of jewelry and two coats. Marshall’s persistence in seeking property from his mother was apparently for the purpose of providing additional resources for his wife, who participated in the meetings with Whitaker and Morrissey as the second codicil was drafted. Her name was not mentioned in the codicil either as a legatee in the event Marshall did not survive his mother, or as a fiduciary.

 

Brooke Astor

At the time of the events in question Brooke Astor was a year or two beyond her 100th birthday. She had been diagnosed with Alzheimer’s disease some four or five years earlier. There was much testimony given by doctors, nurses, employees, and friends concerning her mental status. It was generally agreed that she had diminished capacity in 2003 and 2004 when documents were signed and gifts made. There was also testimony of her declining physical health, sight, and hearing. It was stated that she often failed to recognize those she knew and, on occasion, questioned nurses as to what had just transpired following the signing of documents.

The prime activity in her life was to be engaged in charitable giving, particularly favoring New York City where Vincent Astor had amassed his fortune. For over 40 years it was her plan to make significant bequests to these charities to be in addition to the funds in her marital trust.

 

Charity

Though not a party to the proceedings, its interest in the estate of Mrs. Astor was ever present, as was the testimony—and her public personae—reciting the major contributions she had made through her grants, in particular to libraries, museums, and education in New York City. The changes embraced within the second and third codicils significantly decreased—or in one circumstance eliminated—the charitable interest in her estate except for her marital trust. The charities’ interest, as well as all other matters relating to the disposition of Mrs. Astor’s estate, will be determined in the pending probate proceeding in Westchester County, New York.