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Basketball team owner alters family trust in preparation for sale


Washington families can preserve family assets through the use of legal instruments known as trusts. There are numerous types of trusts, each of which present certain advantages and disadvantages. Some families use what are called living trusts to control a family-owned business.

One such trust is at the center of a controversial legal battle. Donald Sterling, owner of the Los Angeles Clippers NBA basketball team, has recently faced serious consequences for racist comments he made. As a result of his conduct, Sterling was banned for life by the NBA, which apparently wanted to force him to sell the team. The Clippers were technically owned by the trust, for which Sterling and his estranged wife, Shelly served as trustees. Recently, Sterling was declared mentally incompetent to serve as trustee, leaving Shelly as sole trustee. Soon afterward, Shelly entered into a tentative agreement with a buyer to sell the Clippers team for $2 billion.

A trust is a legal arrangement where one person (a trustee) manages and holds property for the value of another (a beneficiary). Many people choose to set up trusts to avoid expensive and time consuming probate proceedings. Probate is the process by which courts facilitate the paying of debts and the division of property to heirs upon the death of an individual. A lot of people choose to set up living trusts for tax advantages, financial privacy reasons and facilitation of the use of an individual's assets in the event of that individual's incapacitation.

Trusts are not solely for the wealthy. They can help individuals of all classes plan their estates and ensure that their assets are well protected during and after their lifetimes. Washington trust and estate planning attorneys can provide information about how trusts can help Washington families.

Source: Chicago Tribune, "NBA, Sterling Family Trust settle ownership dispute," May 30, 2014

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