By Evelyn Brody
The estate of the Godfather of Soul—which could be worth up to $100 million—continues to need judicial supervision. In May 2013, the South Carolina Supreme Court tossed a settlement between the attorney general and the late singer James Brown’s family. As the court explained, the settlement shifted about half of Brown’s estate from a newly created charity—the “I Feel Good” Trust—to his adult children and claimed widow. The settlement also granted the attorney general authority to determine the charity’s governance structure. The trustees ousted by the settlement appealed the decision. With the matter back on remand, the lower court is pondering applications to replace the AG-appointed trustee (see Sue Sommer, Current Trustee in James Brown Estate Refuses Mandate to Serve with Other Trustees).
According to one observer, James “Brown’s estate plan established what may be the largest-ever private charity for educating needy students in South Carolina and Georgia” (Sue Sommer, SC Supreme Court Ends Historic Battle Over James Brown Estate).
Because charities lack definite beneficiaries who can sue to enforce their rights, the common law has long assigned to the attorney general the task of protecting charitable assets and donor intent. But charitable assets are not state assets, nor is the AG a super-trustee. Describing the AG role in charity supervision, the Court declared:
The AG undoubtedly has the authority to intervene to protect the public interest of a charitable trust. However, the AG has no authority to become completely entrenched in an action that began here as one to set aside a will and for statutory shares, direct the settlement negotiations, and then fashion a settlement that discards Brown’s will and his 2000 Irrevocable Trust and replaces them with new trusts, only to give himself sole authority to select the managing trustee. By so doing, the AG has effectively obtained control over the bulk of Brown’s assets and has given his office unprecedented authority to oversee the affairs of the parties that has not heretofor been recognized in our jurisprudence.
Chief Justice Toal concluded her blistering concurrence with the following quote from my article, Whose Public?: Parochialism and Paternalism in State Charity Law Enforcement, 79 Ind. L.J. 937, 1034 (2004):
Where discretion is conferred on a charity’s board, proper state enforcement action over fiduciary decision making reduces to a single rule: The role of the attorney general and courts is to guard against charity fiduciaries’ wrongdoing, and not to interfere in decision making carried out in good faith. . . . To this end, an attorney general is vested with the authority to seek to correct breaches of fiduciary duty that have not otherwise been remedied by the board. However, the attorney general is not a “super” member of the board.
How gratifying that my work helped protect James Brown’s important philanthropy!