When Jerry Buss structured his estate to keep the Los Angeles Lakers in the family, safeguards like the “last man standing” clause backfired. Five of his six children now seek to sell their stake, valued at $12.5 billion, while sister Jeanie Buss fights the move in a California court to protect her governance role.
The Anatomy of an Estate Planning Fracture
The high-stakes legal battle surrounding the Los Angeles Lakers franchise highlights the structural vulnerabilities inherent in multi-generational wealth preservation. Following the valuation established by a recent transaction pegged at $12.5 billion, five of Jerry Buss’s six adult children moved to monetize the family’s remaining equity. But the governance mechanisms put in place decades ago are now colliding with shifting sibling priorities.
Jeanie Buss, who serves as the team’s governor, filed a petition in a California court to block the sale. According to reports from ESPN, Jeanie also asked the court to remove her siblings Janie and Joey Buss as co-trustees of the family trust. At the heart of the dispute is a contentious “last man standing” provision. As Janie Buss described to ESPN in 2017, this clause transfers a deceased sibling’s equity to their surviving siblings rather than their own children. That dynamic deliberately incentivizes the siblings to liquidate assets during their lifetimes rather than pass shares down.
Steven Fox, a partner at the law firm Buchalter, notes that while wealth creators routinely attempt to limit the dilution of ownership, the design of this specific clause is unusual. “I rarely draft that into estate plans, because just because one sibling has cancer and all of a sudden is going to die young, it’s not fair for their children to be divested,” Fox stated, though he has not reviewed the direct terms of the Buss family trust.
The Bottom Line
- Mitigating Sibling Friction: Estate planners warn that distributing equal voting power among multiple heirs often leads to gridlock, deadlocks, and costly litigation when business strategies diverge.
- Utilizing Liquidity Tools: Utilizing life insurance policies within a trust structure can compensate non-operational heirs or grandchildren without forcing the premature sale of core operating assets.
- Centralizing Control: Designating a single, qualified manager or utilizing a pot trust helps prevent splintered decision-making that can destabilize multi-billion-dollar enterprise valuations.
Strategic Structural Alternatives for Wealth Creators
As the “great wealth transfer” accelerates, trusts and estates attorneys point to specific structural modifications that can prevent similar family fractures. Sean Weissbart, a partner at Blank Rome LLP, emphasizes that succession conflicts are likely to grow more common alongside the volume of assets moving from baby boomers to their heirs. To bypass these roadblocks, practitioners highlight three primary advisory strategies.
First, wealth holders can deploy life insurance solutions to buy out younger generations or non-managing heirs. Under this model, the trust purchases policies on the children of the primary wealth creator. Upon a child’s death, their shares revert to surviving siblings, while their own children receive cash payouts from the life insurance proceeds. If the death benefit falls short, the trust can issue a secured note placing an explicit lien on the underlying family business, payable over time or upon a liquidity event.
Second, experts advise separating economic ownership from managerial decision-making. Jerry Buss divided the Lakers’ controlling stake evenly among his six children, granting each an equal vote while assigning Jeanie the gubernatorial role. However, legal documents indicate that co-trustees Janie and Joey were required to vote in alignment with maintaining the family’s 15% minimum governance threshold. Weissbart argues that splitting votes equally among heirs who lack operational expertise is fundamentally damaging to enterprise stability.
“Giving people the say over a multibillion-dollar business who don’t know how to actually manage it is detrimental to the business,” Weissbart explained. Both Weissbart and Fox recommend consolidating shares into a single pot trust, naming only one child or an independent corporate co-trustee—such as a bank advisor—to manage daily operations and execution.
| Estate Strategy | Primary Mechanism | Identified Risk |
|---|---|---|
| Equal Voting Split | Equal governance shares for all heirs | Gridlock, factional alliances, and litigation |
| Single Pot Trust | One designated manager or corporate trustee | Perceived favoritism among non-managing heirs |
| Life Insurance Buy-Out | Trust-owned policies funding grandchild payouts | High premium costs for first-generation creators |
The Hard Realities of Intergenerational Governance
Not all estate practitioners agree on centralization. George Taylor, a partner at Brinkley Morgan, advocates for a more collaborative approach. Rather than concentrating unilateral authority in a single sibling, Taylor suggests granting each heir an equal voice through individual trusts that act via majority rule during major corporate transactions like a sale.
Yet, centralized control advocates caution that majority-rule setups frequently foster deep resentment. “I always tell clients you’re going to destroy the relationship between your children,” Fox noted, describing scenarios where outvoted siblings harbor lifelong grievances after being forced out of prized family assets. For unique, high-profile assets like professional sports franchises, keeping family members completely detached from management is rarely feasible due to the prestige involved. However, for traditional operating companies, some ultra-high-net-worth families explicitly bar descendants from corporate employment to preserve corporate longevity.
Ultimately, legal safeguards cannot entirely eliminate litigation risk when heirs lack the foundational risk tolerance of the original builder. “I tell my clients you’re never going to stop your kids and grandkids from suing each other, because they didn’t earn this; it’s inherited,” Fox concluded. “You built it up. You took all the risk when you had nothing and were putting everything on your credit card. They don’t have that muscle memory.”
Disclaimer: The information provided in this article is for educational and informational purposes only and does not constitute financial advice.
