Wednesday, September 2, 2015

Trust-Fund Zombies: Barnes joins Girard in Pa.'s inheritance hell

The museum is built; the case is one for the ages

Trust-Fund Zombies: Barnes joins Girard in Pa.'s inheritance hell


The Great Alfred Barnes Will Battle is over -- the new, taxpayer-assisted, drive-right-up Barnes museum on Ben Franklin Parkway is built and displaying hundreds of Monets and Renoirs and allied Impressionists and supporting artworks: it is, visitors tell us, a beautiful place. 

The battle has just begun -- to make an impression on Pennsylvania trust law and inheritance thinking, where would-be legators and legatees and their trust counselors are still digesting the lessons from City Councilman Cecil B. Moore's successful civil-rights-era effort to break Stephen Girard's 1831 will leaving the bulk of Girard's millions to a city-run school for "white, male" orphans. (The 'anti' arguments in that case, though withdrawn and reversed, are still being reviewed by the Pennsylvania Supreme Court in another, current case that could hobble Girard College and make its Fumo-era tax-free bonds, taxable.)

The Barnes battle -- which gave effective control over the Barnes collection to the people who own or manage the city's great media (Annenberg, Lenfest, Roberts) and industrial (Perelman, Pew) fortunes, and moved it, very much over the dead pill magnate's objections, from his beloved home and tree reserve in Lower Merion, to a site just downhill from his enemies at the Philadelphia Museum of Art -- is still reverberating, as Bryn Mawr Trust Co. found when it invited Mark Schwartz, the former Pennsylvania legislative aide, muni bond banker and whistle-blower who represented Barnes move opponents in the early years of their doomed legal challenge before state Judge Stanley Ott, to give a Continuing Legal Education credit course, at the Merion Cricket Club, before a standing-room crowd of 75 estate lawyers, accountants and bankers this morning.

Judge Ott, Schwartz noted, expressed "total frustration" with a Barnes board that controlled "181 Renoirs" but still claimed to be unable to meet its budget. Of course, Ott, in the end, ruled in favor of the move. "I'll never understand," sighed Schwartz.

But what else could Ott do? The Commonwealth of Pennyslvania's Attorney Generals, charged with protecting and enforcing charitable trust provisions, failed to recommend alternatives to the move. In a 2008 petition, Schwartz cited an Inquirer piece by former Gov. Ed Rendell attributing the move to a 15-year effort, hatched by Raymond Perelman, to ask Ott to recognize the Barnes move proponents had lied to the court. Schwartz raised questions of conflicts of interest, putting commercial interest before the testator's expressed intentions, and generally using wrongful means to break a will for reasons that were anything but economically necessary.

"This was a board that certainly could have easily raised [the needed] $1.5 million a year," Schwartz told the Merion crowd. "Aileen (Mrs. Comcast CEO Brian) Roberts.... could have taken it from her husband's take home pay without him even missing it," he added, The Barnes spent millions suing Barnes neighbors who opposed the move, that could have been used to mend its budget. Though the neighbors, who never did pay him, were often their own worst enemies, Schwartz sighed. Ott refused to reconsider.

"What's this all mean? The case shows the limits of the judicial process... The game was rigged... The State... totally abrogated its responsibilities... This was a total failure of the adversarial process... If everybody [who is supposed to be representing the estate] is on one side of the table, courts don't work. Even the judge indicated it was hard to run these proceedings... The Barnes board sold out...

"So, if any of you have relatives who are on the Barnes board who have trusts, I'm available to try and break those trusts," Schwartz concluded, to laughter. He finished, and was surrounded by well-wishers, and maybe a few lawyers thinking their clients may in time benefit from Pennsylvania's flexible interpretation of -- its apparent willingness to reverse -- its wealthy citizens' expressed last wishes.

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PhillyDeals posts drafts, transcripts and updates of Joseph N. DiStefano's columns and stories about Philly-area business, which he's been writing since 1989.

DiStefano studied economics, history and a little engineering at Penn and taught writing at St. Joseph's. He has written thousands of columns and articles for the Inquirer, Bloomberg and other media, wrote the book Comcasted, and raised six children with his wife, who is a saint.

Reach Joseph N. at,, 215.854.5194 or 302.652.2004.

Reach Joseph N. at or 215 854 5194.

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