Real estate is everything in Florida, especially when there’s multi-generational wealth to protect from unsatisfied legal obligations. If the assets are encumbered, estate planners need to think across the usual lines of transmission.
Pity O.J. Simpson’s financial planners. Providing for most pro athletes in their golden years is tough enough without having to deal with a catastrophic sudden image reversal — or a $33 million court civil judgment, much less a late-life jail sentence.
But somehow, it looks like he’s going to live comfortably for life after all now that he’s out on parole. And so are his kids — shock “Kardashian” or otherwise.
Rumor has it the Simpson kids are buying up a lot of Florida real estate in cash deals. This may be the last we’ll see of his money before it dips below the surface forever.
Step one: protect the assets
If O.J. had thought to transfer what was once a $10 million fortune into a structure designed to insulate it from creditors, he probably wouldn’t have resorted to the shady memorabilia sales that ultimately put him in jail.
Of course, if we’re playing with hypotheticals, his lawyers would have drafted an ironclad prenuptial contract for Nicole in the first place. He ended up promising to pay her a total of $2 million in cash and child support in the divorce, which took a dent out of his fortune at the time.
Her death and Ron Goldman’s effectively ended his post-football career along with their lives. The Hertz endorsement deal and other paid work vanished immediately. He was practically retired at age 46 — not really out of the ordinary for NFL legends.
Once the families launched a civil suit to punish him where the criminal court didn’t, the nest egg he’d accumulated to pay his way in that retirement became vulnerable to what ultimately became a $33 million lien on his assets and future earnings.
While the legal process dragged on, Simpson’s lawyers worked through the best options they had left. The right kind of trust in the right state could have left his money invulnerable, but the time to create that trust had come and gone by the time the papers were filed.
Instead, the lawyers shifted all the money they could into ERISA-protected retirement accounts — reportedly $4 million in pensions spread across various Simpson ventures — and moved his domicile to Florida, where he could keep a house even in bankruptcy.
It worked fairly well for awhile. Even if he could have found work as a pariah, he didn’t take it. The families seized what they could, but only clawed back a few million dollars.
Retirement seemed largely assured.
Plenty of people have weighed in on the failed memorabilia sale that eventually sent him to prison. To me, it looks like an effort to fill the gap between his “retirement” from fame and the age at which his nest egg started paying out.
Signing pictures and other career collectibles is a classic cash transaction, passing under the radar of the families and probably the IRS as well. But while a little bit here and there would have been enough to pay the bills, the shady side of the relationships apparently got out of control. He went to jail at age 61.
A lot of retirement income streams halt on incarceration, but Simpson had already started drawing down his NFL pension — $25,000 a month at the time — and the private accounts as well. As retirement vehicles, they were effectively in trust and protected from outstanding creditors.
Where things get strange is that his kids were authorized to cash the checks in order to make his house payments, only to spend the money instead. As a result, the bank foreclosed on the Florida property after all and it’s unclear whether any of the pension money was ever deposited.
Personally, I suspect the arrangement never changed and those funds are gone. Maybe they only spent the NFL cash and never managed to take an RMD on any IRA-style accounts the lawyers had set up. It’s hard to say.
(Yes, for all you planners out there, the silver lining is that prison counts as an extenuating circumstance so he wouldn’t have been penalized for not taking the RMD if he had stayed in prison beyond next January when he turns 70-1/2.)
We know that his kids with Nicole have bought about $500,000 in investment property throughout St. Petersburg, Florida over the last few years.
They’ve apparently paid cash. If the money came from Dad’s NFL checks, it’s a murky situation.
Can they get him to call the money a gift? In that scenario, there’s a small chance the other Browns and the Goldmans can’t claim they were cheated, if the “gifts” were documented and structured the right way.
Simpson probably isn’t going to worry about estate tax because he’s not going to amass a big enough estate without the families clawing back the cash. That’s not a threat here.
It would’ve been smarter to use Dad’s money to buy him a new house to live out the rest of his life, then inherit the real estate after he’s gone.
Remember, Florida homestead protection only covers the residence, not investment property. It’s vanishingly unlikely that anyone would decide to move into an entire portfolio of slightly run-down houses and apartments, even if the rules were to somehow make that desirable.
This isn’t about Dad. If we’re looking at his money, he couldn’t have bought these houses in the first place before having the court grab them and sell them.
But we’ll just have to see. Maybe this is the only parental legacy they'll get. After all, their mom is dead.
And in the event the rumors are true and Khloe Kardashian is really his daughter after all? I think she'd rather stick with the Kardashian estate plan.