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Attorney Roy Cunningham - Trusts & The Buffalo Bills

Mar 30, 2014|

insight into how team ownership might be structured now, after the death of Ralph WIlson

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And I say to each week but again through this week what do we could just talk politics. And the biggest story of the week is the only story we are talking about today. You might schedule a little bit and say hey Dave what does that have to do with politics will eventually the way it plays out. Perhaps a lot later in the program will be joined by Erie county executive mark -- cars. Talking about the least between the Buffalo Bills and Erie county. Of course all of this in light of the death of Ralph Wilson this week. 8030930s. And number four on the way you like to join us we'll have an opportunity for that we're also going to look at remember his plans for the stadium on the outer harbor. How does the death of Ralph Wilson change any of that. Coming up a little bit later in the program kicked that around also remember the buffalo fan alliance they're the ones that want all that extra money. Contributed by the community this kind of going up pot. Make a big incentive that we could throw at perhaps an out of town owner or someone to say hey stay in buffalo. All of this happens because of the death of ruffles and we're going to be looking at how. The law approaches that it's believed right now that the Buffalo Bills are held innate trust. We're going to talk a little bit about that and see what exactly that means with an attorney that concentrates. In trusts in the state law Roy Cunningham is here from -- Mathias Wexler helped me Mathias Lucas what answer. But one more time. Lucas Mathias Wexler free treatment OK very good. And we we would love to get some insight into how this all works thanks for joining us right. You're welcome. Talk to me about. That kind of trust and we might never know we're here for sure. But talk to me about the kind of trust. That Ralph Wilson's the state is in and more specifically how what how home the overall how that trust. Changes things doesn't -- restrict certain options. Are there certain scenarios out there that are more likely now because of the trust or is this just a vehicle that will never really peak it got so. It is very difficult to say what it will do from the trust -- have been something that was set up many years ago. Four state cleaning purposes to avoid estate tax as most people in my sort of industry know the federal state taxes. A flat right now 40%. Warrant. In his state ever five point 35 million so if you assume that the bills and I think the Forbes had them at age 75 or whatever number. Multiply that by forty that's the estate tax at some point. Bomb he -- set the trust of many years ago to just simply be a vehicle -- with which to avoid estate tax. Com or it could just simply be a trust that will -- server into but he put the team in the air. Pretty much relative to the trust it's a private document. It would never most likely seen the light of day he would never see it. In total loss to what it means you know if you room and take for example com. Jackie Kennedy Onassis her she had that she basically had a -- okay it was in New York County Circuit Court. DR. Twenty -- roughly your thirty minutes after it was filed. Someone more than made a copy of it paid I think it's five or ten dollars a page and for a long documents -- -- of -- bucks and dropping charges. And took the thing emission -- that you can say it. And some people do that some people don't care lots of folks who are the very property either either very wealthy very famous. Very controversial -- -- hall wrote The Who put their estate and trust that they will put their assets of the trust to simply because of the privacy issue. This might be a really crude analogy but it's one that pops in my caffeine. I've had right now. The trust is basically a container or a bucket you pour all your assets in there. And the legal structure dictates who gets support out and appointed trustee who is in charge of all the water and a -- right. That's pretty much hell -- do there's a very crude example it's pretty much help works mechanically I mean they're to be lots of assets and there the other reason why Mitt. In this case particularly him mr. Wilson may have put that in there was -- simply because. You know the Buffalo Bills were real complicated asset to run as he got older perhaps I'm thinking maybe the trustees were running it for a while. And quite frankly any remotely logical sort of pattern of what's gonna happen next could be -- I mean for all we know. The trust to have a provision in there that says look at it in two years five years ten years whatever the the thing is. It's to be sold -- and some insider perhaps or some local person or whomever. And here are the terms of the throw the terms of the deal of the Dutch -- the dealers sold oversold the rules of the trust can certainly rule things in -- out. But the actual presence of the trucks just. That the that the fact that this is now being held by a trust. That doesn't rule anything and that doesn't put anything commissioners -- the time it takes ruling nothing off the table but the other thing you have to sure I'm certainly not other than just the thing and you know I -- I'm not that much of an expert of -- of the NFL rules. -- the NFL rules as to what people handing candy were very sort of weird and odd and it's a private club and -- I'd sort of thing back to. You know we heard some bits and pieces but I don't think we -- the full story about Jackie cook and his son in the Redskins and Daniel Snyder. So I -- the ultimate thing at the end of this I think is the -- there's an opera the NFL is gonna half to. Media owners I think get to approve -- the new -- is so. -- that that's you know that being said I mean -- to be a bunch of different possibilities only one possibility you know. As he's been very involved in the team would be Russ Brandon he may be the person who is one -- by the team maybe not. You can also is not outside the realm of possibility after a few via the short list of suspects guests and -- the trust you have said before I think. Could even have -- right of first refusal clause for him or anyone out yeah well first refusal clauses of the first right to by the team. And it could say that our kids say that for example. -- there's a collection of the the blue -- a buffalo business person would be given preference that's a very short list of people would have that wherewithal to do over buffalo group. Bomb he can say that it could say. -- in -- seven which is a believe a release which is good year that has to have the smallest buyout possible. So the team at the most that the best value you can get a can say anything and that's sort of they can say anything that's within reason it's you know it's a mission is probably going to be I'm guessing the Michigan trust. We're Delaware trust lots of well we fixed in the go to Delaware for some of these trust because the rules were a little bit more. It was a whole it is a more robust body of wall there tends to be there and other states but it's just. It can be anything that's the sort of the speculation now is just purely on speculation. You know 30930 is the number if you'd like to spend let's underline that you'd like to speculate with us as well. We would love to have your board attorney Roy Cunningham is here we're talking for the entire two hours today. About the Buffalo Bills in light of the death of team owner Ralph Wilson. What exactly does that mean in terms of this trust that we believe and and I guess -- -- -- to get to as well. That we believe now is operating team it's assumed that there aren't Entrust. We're talking about some of the estate and legal issues around that and how that perhaps could influence some of the scenarios that play out. It's assumed we may never know you're saying. Bomb in the -- there is an end in the NFL has sort of feel the NFL approval process if there's a sale. You may see a copy of the trust disclosed that I don't know what the NFL discloses -- doesn't disclose. Bomb but most likely unless there is some reason or. The trustees feel what's important to disclose who trust you may never see a copy of it. Com. He is just simply is it's one of those things it's one of the reasons why wealthy people put assets and trust the public to privacy issue. And the other reason we can get this after the break the other reason is because. By doing it this way they can minimize state taxes state taxes they can deal with the actual value of the gas or splitting off in different directions. Even do that but it's hard to say I mean if it's if it's. -- if it's an irrevocable trust or so many years ago that's probably what they did they put some other -- they. -- did a couple of transactions to minimize estate taxes. The way that'll be so that now there's a couple of ways quite frankly at this point. There can be no state taxes -- if the whole flings left and trust Ralph's wife because you have an unlimited marital deduction for state tax purposes. However the estate tax at her death would be whatever the fair market values at that point. So it's a fairly you know it's. There's -- there's a lot particularly with larger states where you've got. -- when your body unique assets big assets at something that's not you know it's not like you know a 100000 shares of IBM stock quality clothes settled Friday when he died or whatever that was he died Wednesday. -- you pretty much know what the assets worth and you know kind of what you can do I mean it's in the there's a lot more things you can do with the because it's a closely held -- quoted in in theory have been given to her in trust. And yet have the -- operating it completely separate from her. -- the trust and yet if it was in trust for her the trustee will operate the business they would be the folks who. In and basically run the corporation because they have their legal right to do that. All right coming up after the break we'll look at another interesting part of -- -- There isn't we talked about it earlier that big -- with the Erie county coming up at 11 o'clock Erie county executive mark on cars take your calls on that. He says it basically that safeguards the team keeps them here and a lot of different ways. But it does something else to it has these buyout clauses and that's certainly affects the value of the team. We'll get to that after this right Cunningham is here it's hard line on his radio 930 WB yen. News radio 930 WB and this is Dave -- We are talking about the death of Ralph Wilson if you'd like to join us along the way we have a couple phone lines open. 8030930s. Numbers this hour we're spending some of the scenarios trying to figure out just what happens when a team like the Buffalo Bills. Is held in trusts after the death of an owner like Ralph Wilson Roy Cunningham is here he's an attorney who concentrates in estates and trusts. You told me something that I find really interest and under the structure of the -- with Erie county. And I've always wondered why would why would the bill's -- that's. There is a buyout clause. In year seven they can get off the hook for 28 million but if they break the -- and anywhere else within the range of at least they have to pay. Some huge amount basically 400 million dollars Forbes magazine values the team at 875. Million. They would have to pay -- -- take care -- I'm not a math was by any means but give or take here a new owner who wanted to come in and break that lease and move elsewhere. Would have to pay half the value of. The team just get out of weeks. Yeah I mean I think. The reasoning and then from a state tax attorneys perspective. The reasoning is different than watch a normal fans perspective is which is interesting to me that because I've wondered. Other than. The ulterior the be all truest of motive of why keep the team in town. I've been scratching my head saying why in the world with a team agreed that. But you have an explanation yeah I mean this is kind of hell I think this will work through some sort of walked. Lou oddly enough we were kicking this around I had lunch with regard he does business -- Williams on Friday we are kind of taken us around a little bit. Is relative chin the -- Ralph Wilson dies there we'll have to be a valuation done of the team. And that value will take into consideration lots of factors revenue when. You know those like you know added there's a -- of Whitney of things the iris looks at one of them is going to be. You know to a completely disinterested third party buyer. What is the team really war. And usually in most estate tax situations you wanna try to get them value was lowest possible well if I have a situation where. Most of the buyers most reasonable buyers for this team we're going to be out of -- reasonable buyers are probably don't wanna move this team. I can perhaps argue in the valuation this is of course subject to publish some arguments in perhaps an audit with the Internal Revenue Service which is kind of in the state this size is gonna get audited or at least some sort of review would just as what it is. Com what you're gonna see is if I have eight lease where there's a 400 New York penalty and all of my buyers around can -- I think I can argue my way into where that's gonna reduce the value of the team not necessarily from some buyer buying it but from. Here's what does work on the day he died while there's this penalty so it's not quite worth that so the value is less so the estate tax would be less is is one part. That's one possible scenario army has something to think about it if I'm buying a house and needs a new roof Fiona might oftentimes discount the price 101000 dollars for a new group same idea similar kind of thing here it's exactly the same idea it's just simply. All of this put the only news out of the leaking roof it's -- penalty to Erie county. It's the sort of Bennett with the benefit here is that the job penalty from here to America I -- to them. But I mean in the in this case is just simply. What's the value 11 given day because the whole issue with one of the big issues with his -- gonna be the estate tax the transfer tax. When you die you have a certain size of state. The IRS imposes you know you pay a state tax on beat the building to transfer those assets well if the assets if the people we're gonna by the absence isn't. And it's a closely held -- and it's not know -- his assets a million shares of IBM stock per 100000 shares of IBM stock. What was the -- what was the low on the day he died that's the fair market value. Bomb and it is what it is because I can go directly into the market and I can sell it in most cases. Bomb in this case because it's a closely held asset. You're gonna have aid and an export to does valuations opine as to what the value might perhaps be. You know the issue of the lease is certainly going to impact and it's probably no less than that so. Do I know that that was perhaps what he intended with for weeks or you just we keep the team entail. I don't know about two it could have been both I don't know it's just simply it's it's completely speculative but it certainly. From the point of view of what -- the fair market value B of the team on his day and date of death if I don't have this -- with this huge penalty it's certainly creates. -- it would -- the value would be I think more and is that 400 million that it is now discounted because of that. That's shielded from taxes that that's why do you think. If it's not a surely it's what you're trying to do is it's a transfer tax -- whatever the value as the taxes imposed on the value. So the lower the value the lower the potential taxes. Now and that's one possible theory if you left it -- trust and his wife and their theory makes no sense at all but if you left it in a trust where. It's gonna be sold and it's going to be distributed amongst a bunch of different. Brought to us to where they'll be apiece for the wife and peace for the other the other child and the other relatives it does make some sense. What I think of a state taxes -- largest states in sports teams. -- not -- it comes to mind I know with a time of Seymour Knox is -- the widow -- that basically ended up giving. Their biggest state in East -- to New York State to state park. I'm assuming a extensively because -- by gifting it to the state. They didn't necessarily have to pay state taxes -- it is there a scenario. That's unfolding now on the Wilson case. That would have them have to break this -- -- so this ass off because of a state taxes or does the trust may call that move. Are the the trust Couric could. Not a skill and -- pin I mean the estate taxes. For someone dies like mr. Wilson his wife. If he leaves essentially. Everything. Beyond five point 34 million dollars roughly five point four million dollars to his wife either directly. Or in a trust to -- call -- Paul by the term reward interest property trust. Which is sort of a vehicle were basically allows him to take a Merrill adoption while leaving assets in trust. Yeah and that would be. -- that would movie with the estate tax in its entirety when a lot of wealthier people won't do. And I know that you know mr. Wilson was nerd we have reduced three times and he hands. A lot of that there a couple of other relatives what he may do is he may leave a portion of that. In entrusting his wife and then there may be pieces and parts that are. Left others who knew there would be estate tax due on the coast -- the spouse so it's kind of what what the wealthy people tend to particularly if there are multiple. Roof. You know for like -- description -- more of a modern payment where you have perhaps some children from one marriage and what -- current wife and whatever. But more than an area that fans are worried about he wouldn't have to break up a little pieces and liquidate in sales that we could play. White ones like two analyst Larry when have to do that way conducive to just set up -- Detroit you said government trust them and are basically white woman or the car wife and children regular premium for excellent campaign offer. Arnaud any thing wrong to do them and I mean it's loosening the trust and -- each each. Group would have perhaps excuse me a share of that trust and the pins one watched. Because the -- -- in -- -- a true it's one of those things to -- you're going back to the original parliament -- thing that is. Perhaps reasonable we can speculate that that to be the answer. In this case inning and that's that's sort of the the thing is. It was a bunch of different ways you can do this. And therefore let us and the same way we began what is your best guess underlining that we're speculating. Emphasizing that it's aghast at what do you think it's gonna happen if I was guessing. I would think that. Perhaps the deal is already put into the trust and it's it's triggered on certain date your seven -- -- whenever. Some near -- there's a big deal with the trust only provides a deal. It's were probably the bills insider. Or some local business person to buy the team the trust also probably provides the terms of the hat deal subject to NFL approval. Bomb where whereby. Whoever buys it. Arm is probably gonna buy a one almost electoral vote and it opens the situation very much akin to a leveraged buyout where you're gonna use the revenue from the team to finance the buyout to the trust. And that's how it's probably gonna go out couldn't tell you those people -- that would be my best guess all right and at this point that's all we're doing a good expertise and insight though. Roy Cunningham an attorney with Olympus Mathias Wexler Friedman pretty.