The tragic death of NBA legend Kobe Bryant (“Kobe”) is giving rise to a cautionary tale for estate planners and their clients. Although Kobe had a carefully crafted estate plan in place, it failed to account for the birth of his youngest child, Capri Bryant, who is just nine months old. On March 18, 2020, the Co-Trustees of the Kobe Bryant Trust filed a Petition to Modify Trust before the Superior Court of California for Los Angeles County to amend the Trust to add Capri as a beneficiary. The court has scheduled a hearing on the Petition for May 28, 2020.
Unless amended by the court, the beneficiaries of Kobe’s Trust include only his widow, Vanessa Bryant, and two of his three surviving children – Natalia Diamante Bryant, 17, and Bianka Bella Bryant, 3.
According to the Petition to Modify Trust filed in Los Angeles, Kobe created the Kobe Bryant Trust in 2003. The Trust was amended in 2011 and again in 2017. The 2017 amendment was made after the birth of Kobe and Vanessa’s third child, Bianka, but before the birth of Capri. Upon Kobe’s death on January 26, 2020 in a helicopter crash, the Kobe Bryant Trust was divided into two separate trusts for tax reasons, both for the benefit of Vanessa and the three oldest Bryant daughters, but not Capri. One of the Bryant children, Gianna, died with her father in the crash.
Co-Trustees Vanessa Bryant and Robert Pelinka, Jr. petitioned the court to modify the Trust by adding Capri as a beneficiary. Under the California Probate Code, the court may not modify a trust where the continuation of the trust is necessary to carry out a material purpose of the trust (known as the “material purpose doctrine”) unless the court, in its discretion, determines the reason for modification outweighs the interest in accomplishing a material purpose of the trust. In other words, the probate court will likely allow the amendment if it finds allowing the addition of Capri as a beneficiary is consistent with the material purposes of the Trust or if the interest in modification to add Capri as a beneficiary outweighs the interest in accomplishing the material purposes of the trust.
The Petition alleges “[t]he material purpose of the Trust is to provide a fund for Kobe’s wife and the daughters of Kobe and Vanessa for their support, care, and maintenance and, at the same time, to provide protection for the Trust’s assets so that the assets will be available for the benefit of Kobe and Vanessa’s daughters, equally, upon Vanessa’s death.” The Petition points to the amendment Kobe made to his Trust on July 28, 2017, “shortly after the birth of Bianka,” as proof that the purpose of the Trust was to provide for all of the children of Kobe and Vanessa. Typically, the intent of a trust must be proved by the terms of the trust itself, and evidence from outside of the language in the trust may not be considered.
Although the Kobe Bryant Trust is not public record, the Petition provides a summary of its terms. Kobe served as Trustee during his lifetime, and Robert Pelinka, Jr. and Vanessa Bryant became Co-Trustees of the Trust at Kobe’s death. Although the Petition does not indicate the Trust was revocable during Kobe’s lifetime, Kobe almost certainly had a right to revoke and he did amend the Trust on two occasions. Upon Kobe’s death, the Trust was divided into two trusts, both of which are for the benefit of Vanessa and his three oldest daughters, but not Capri. One trust is intended to be exempt from generation-skipping transfer taxes and will be funded with assets equal to Kobe’s unused lifetime GST exemption, and the second trust created upon Kobe’s death is referenced as the Family Trust.
As noted above, the beneficiaries of the Family Trust include Vanessa and two of Kobe’s three surviving children. Vanessa holds a limited power of appointment, meaning she may direct distributions of assets at her death to Natalia and Bianka and/or their descendants. If Vanessa does not exercise her power of appointment, the Family Trust in its current form will be divided at Vanessa’s death into separate trusts for Natalia and Bianka. The beneficiaries are entitled to discretionary distributions of principal and income for their “reasonable support” and the beneficiary trusts for Natalia and Bianka are to be distributed outright to the beneficiaries when they attain a certain age.
The Petition seeks to add Capri as a beneficiary with rights equal to her remaining sisters.
For estate planners and clients alike, the lesson to be learned from the death of Kobe Bryant is simple. Estate plans should either contain provisions including after-born children in the pool of beneficiaries, or they should be updated immediately after the birth of subsequent children.