A Strong Offense
A Stronger Defense
Consider a situation where a wealthy testator wants his son to be provided for but still also wants his son to develop a healthy work ethic. Can the wealthy testator’s will ensure lifetime employment for a beneficiary? Maybe, but probably not when that lifetime employment is with a company the officers and directors of which owe fiduciary duties to the corporation and its creditors.
In Grant v. Bessemer Trust Company of Florida, a Florida appellate court affirmed a probate court‘s finding that the employment codicil to the will of Milton Grant did not guarantee lifetime employment within Grant Communications for Milton’s son, Thomas. First, this precatory language in Milton’s will was ambiguous:
Employment provision for Thomas Jeffrey Grant. It is my intention that [Thomas] continue to be employed in a suitable and reasonable position in connection with the operation and management of my television station group. Accordingly, I hereby direct my Personal Representatives to make the necessary arrangements with my Business Trustee to ensure such employment and to ensure that his annual salary shall be no less than $125,000 per year, appropriately adjusted for annual cost of living increases.
Second, the probate court concluded that employment of any type could not be devised. The appellate court, however, reserved such a broad conclusion finding instead that this employment within Grant Communications could not be the subject of testamentary direction binding on the officers and directors of the various companies within the Grant Communications conglomerate. The reason it could not be binding is because it would conflict with the fiduciary duties of officers and directors to the corporation and its creditors. The effect would be to provide an impermissible restraint on the corporation’s directors.
Although the appellate court didn’t close the door on the possibility that employment could be guaranteed by will in some situations, one of the lessons from Grant v. Bessemer Trust is that, if you truly want to provide lifetime employment for someone after your death, an employment contract – not your will – seems to be the better way to accomplish that goal.