Mistrial: Should Bill Cosby's Heirs Sue His Lawyers For Failing To Protect The Assets?

Mistrial: Should Bill Cosby's Heirs Sue His Lawyers For Failing To Protect The Assets?

Pushing the timeline back a few more months for a new trial only prolongs a $100 million ordeal that the right legal framework could easily have prevented. Every wealthy family needs to prepare before trouble starts.

On the surface, Bill Cosby’s lawyers scored a significant win yesterday by feeding just enough doubt to leave a sex assault jury unwilling to convict their star comedian client.

But it’s really only a delaying action, not a final fresh slate. A new trial will start soon.

Cosby is still fighting three sexual battery lawsuits in California and at least another half dozen claims from women who say he wrecked their careers to keep them quiet.

Those suits are literally going to drag on for years. Meanwhile, Cosby turns 80 in a few weeks. Unless he escapes the litigation cloud in this lifetime, the threat will weigh on his estate.

And either way, the assets needed to be locked up long ago.

Wealth preservation is everything here

We’re not going to weigh in on Cosby’s moral guilt, legal innocence or the way he’s lived his life. He’s evidently made a lot of mistakes.

The family advisors get paid to mitigate the financial impact of those mistakes. 

I think from a future earnings perspective, Cosby is done. NBC cancelled his big TV comeback and won’t work with him again. His last stand-up tour fizzled.

He’s also apparently facing serious vision problems.

That leaves the family firmly in wealth preservation mode. Ordinarily, that’s not a bad position, especially when you’ve got an estimated $400 million in career earnings to preserve.

But with the women who say he assaulted them talking about $100 million in collective damages, legal liability could take a huge bite out of that family fortune

Cosby has four living daughters and three grandkids to share his posterity. That $100 million could make a huge difference when it comes to paying their bills in perpetuity.

That’s where the advisors needed to focus from Day One. Because even if Cosby dies before the legal wheels stop grinding, his estate remains on the hook.

Of course if the bulk of the assets were rolled into an asset protection trust years ago, it wouldn’t be a problem.

We talk a lot around here about the way asset protection trusts shield wealth from litigation and other liabilities by formally separating the property from the person.

Any individual can become obligated to pay a debt or courtroom judgment. But if the money is held in the right kind of trust, that obligation hits a brick wall.

While I don’t know if Cosby’s lawyers took this step to protect their client early on, as far as I’m concerned it’s become a must-have structure for anyone in Hollywood.

Stars by definition live in the spotlight. They’re a magnet for both attention and temptation. Even when they’re as squeaky-clean as Cosby once seemed, lawsuits can become a lot more than a nuisance.

After all, even the “nice” celebrities rush into marriage without a clear separation agreement and then risk career earnings to the divorce settlement. Asset protection trusts can help with that.

And there are always innocent accidents. Cars crash. Parties get out of control. Contracts get broken. Agents and managers screw up. Every dollar not protected can be taken away.

Maybe Cosby has plenty of money held in trust where his accusers can’t get it. It probably doesn’t give him 100% protection, but it might be enough to keep his heirs comfortable for life, even if the lawsuits wreck his personal bank accounts.

Timing is everything

Statutes of limitations are a huge factor in whether asset protection trusts succeed or fail. In Nevada, for example, a trust needs to be mature for 24 months before it’s ready to roll.

That means that Cosby would have needed to create a trust before 2003 in order to be shielded from the lawsuits that started sprouting in 2005. 

He settled the first case for a rumored 7-figure amount, which makes me think that he either didn’t have the right vehicles in place or simply wanted to quiet the story.

Unfortunately for everyone concerned, rumors and allegations kept circulating. Most were old incidents dating back as far as the 1960s, but a few were within the timeframe that would allow criminal charges.

Either way, Cosby was now part of a pattern of cover-up and confession. If the first settlement didn’t motivate his lawyers to start shifting the family fortune away from their client, I’d be surprised.

Even today, his accusers may not have a case. But why leave it to the vagaries of courtroom argument?

As it is, the statute of limitations on sexual offenses keeps widening in many states, so the window of liability expands with it. 

A trust created a decade ago would probably do a lot to shield the family, no matter what happens to Cosby himself.

And even if he dies under the cloud, new suits can still be filed against his estate — but not his trusts — for an entire year beyond that point.

Cosby has seemed more worried about staying out of jail in recent months than salvaging his career or protecting his fortune. Unless there’s a seasoned trust in place, it’s too late to win either of those fights.

For your clients, the time to put measures in pace is before the fall from grace even starts. It isn’t pretty, but it’s how the fees are earned.

 

Popular

More Articles

Popular