Demi Moore Pool Death Puts Asset Protection To The Test

Demi Moore Pool Death Puts Asset Protection To The Test

Staff taking responsibility for after-hours guest drowning takes the legal pressure off the star and her family, but the owner of the premises still shares the financial liability if wrongful death lawsuit succeeds.

Like a lot of ultra-high-net-worth people in less glamorous walks of life, Demi Moore doesn’t really need to worry about wealth creation or keeping her money working hard enough to meet her financial goals.
She’s easily worth at least $100 million, much of which is currently tied up in showpiece residences on both coasts. Protecting those hard assets is her advisors’ real strategic priority.
That’s why when a 21-year-old ended up dead in her Los Angeles pool a year and a half ago, the Moore machine needed to brace for a wrongful death lawsuit that could cost millions.
That lawsuit emerged last week. Moore and her family aren’t named as defendants, so the defense is working so far.
Held in trust, insulating the family
It’s hard to put a price tag on a life, and with no cap on wrongful death awards in California, Demi could have faced bankruptcy if the plaintiffs prove that irresponsibility was a factor in the drowning.
After all, while she and her daughters didn’t actually throw the party that evening -- they weren’t even in town -- the owner of the premises is liable for accidents and injuries even when they’re not there.
She’s 54 now and hasn’t done a truly big movie in over a decade. I suspect she wouldn’t relish having to take every exploitative job that comes her way simply to rebuild her net worth if the court pushes her back to square one.
But her advisors knew that celebrity attracts legal drama, so when she bought the house back in 2003, she created a trust to hold it and protect it from any personal debts her Hollywood lifestyle might ultimately rack up.
Since they had the foresight to create the trust in the first place, they probably made sure to do so in a jurisdiction that provides the strongest possible shield against creditors.
After all, she’d reaped a reported $90 million in her divorce from Bruce Willis just five years earlier. Making sure that wealth didn’t flow away as easily as it flowed in had to have been a priority.
Either way, with the house legally owned in trust, the family of the man who drowned aren’t suing Demi. They’re suing the trust itself and the trustee, who happens to be her business manager. If they win, the trust is only liable up to the amount of property it owns, which I suspect is just the house.
The Manhattan penthouse, bank accounts and other assets are safe. From her point of view, that’s definitely a good thing.
Employee liability and spousal entanglements
On the other hand, her trustee is theoretically exposed to whatever award the court decides to impose. She wasn’t even on the scene and doesn’t actually own the property either, so odds are good the brunt of any blame will be fairly light here.
As the employer in this situation, Demi can opt to cover all costs. She isn’t obligated, but since this is all in the line of duty, it’s probably the right thing to do.
The other employee named in the suit is a bigger litmus test of Demi’s generosity. This is the house manager, who apparently invited the dead man to a late party when the Moores were gone and then lost track of all the guests around the pool.
He apparently said he couldn’t swim, which led the police to determine that he simply slipped and fell in over his head.
Nonetheless, for failing to supervise everyone around the pool -- and adding alcohol to an already unsafe situation -- responsibility falls on the party host.
This is where the details of Demi’s personal relationship with her employee would come back to haunt her if the trust wasn’t there to break the chain of authority.
For one thing, the boss is on the line if employee recklessness causes an accident. Since the trust is the defendant here, the residence may be structured so staff technically work for the trust. That makes sense -- a lot of ad hoc family offices evolve around the business manager who hires and fires.
And if the employee deliberately disobeys the boss, it stops being the boss’s problem. We don’t know whether Demi authorized private pool parties in her house or not. If she gave the green light, the situation becomes very different from one where the staff were taking advantage of her absence.
Demi has stood behind her house manager, but the details could go either way. And again, if it was the business manager calling the shots, that’s where the chain of command really ended.
One way or another, Demi looks like she’s out of the spotlight here. At worst, the house may have to go to cover the trust’s liability. That’s probably okay. She was looking to sell it anyway -- the pool is apparently a bummer now.
And remarkably, another possible defendant with deep pockets hasn’t been named in any event. When Demi married Ashton Kutcher, she rolled the original trust into a new one -- apparently in order to add him to the beneficiary list.
It’s unclear whether she took him off as part of the settlement when they split three years ago. Leaving him on the trust after the divorce seems odd, but if he’s still in the documents, he’s still got a long-term stake in what happens to (and on) the property.
Either way, rolling the trust probably wasn’t the wisest call. Asset protection trusts rely on a seasoning period before they shield the property from creditors.
If the old trust was of this type, it was fully seasoned by the time Demi and Ashton got married, but after that point, the new trust would still leave the house vulnerable for several years before full protection kicked in.
That’s an unnecessary risk that needed strong balancing benefits to accept. After all, the fatal pool party could have happened years ago -- and if Demi was unprotected at the time, her advisors struck out.

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