The Ultimate Diet: Dr. Atkins’ Estate Loses Millions Due to Faulty Administration

You may recall a television show entitled “To be a Millionaire.” Each week an anonymous donor would give random individuals a $1 million gift. We would then watch how this gift changed the beneficiary’s life. As you would expect, the change was not always for the better.

A similar experience can occur in estate planning. Take the case of Dr. Robert Atkins, the famous diet doctor who died in 2003. During Dr. Atkin’s lifetime, virtually all of his wealth was tied up in his business. He did not have excessive amounts of cash to spend and he was not known for maintaining a lavish lifestyle. When Dr. Atkins died, his wife became responsible for administering her husband’s estate. Unfortunately, she did not have the knowledge or expertise to perform the task.

Dr. Atkins’ business empire was sold and the estate received over $420 million as its share of the proceeds. The proceeds were split between a marital trust for his surviving widow and a charitable trust to support medical research.
The first thing Mrs. Atkins did was to fire the trustees selected by her late husband. They were replaced by an entrepreneur she met at lunch in a posh restaurant and his two associates. They convinced Mrs. Atkins to pay fiduciary fees far in excess of the amounts allowed by law. They also finagled long term contracts which provided them with job security for Mrs. Atkins’ lifetime.

Mrs. Atkins recently married a rich socialite who made her his third wealthy heiress wife. Poor Mrs. Atkins found she could no longer afford to live on the $15 million annual allowance she received from the trust. So she demanded an outright distribution of $100 million. She sued the trustees for more money, and the trustees counter-sued her for additional commissions.

It is very common for “regular folks” to receive large cash windfalls when someone close to them dies.

Life insurance can make a widow an instant millionaire. Do you carry millions of dollars in insurance to protect the beneficiaries of your estate?

Does your retirement plan makes up the bulk of your estate? You may be taking the minimum distributions allowed by law. However, on death, there can be literally millions of dollars passing to your beneficiaries.

Are you the frugal owner of a closely held business who pours all of his income back into the business? Your heirs could receive a small fortune under the buy-sell agreement.

Are your beneficiaries capable of handling estate administration?

Do your fiduciaries have the best interests of the beneficiaries in mind?

Can your beneficiaries replace the trustees with qualified independent fiduciaries?

Do you provide an incentive for your beneficiaries to use their inheritances wisely?

Call me to make sure your estate does not suffer an unexpected “diet.”

Kenneth R. Cohen, Esq.
(201) 791-7797