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| The Top Estates |
The Bakal Estate
Elizabeth Harris
08/01/06
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Command and Control
Instead, he decided to set up an unregulated personal
trust company and transferred fiduciary responsibilities to an oversight
company. Directors of that business take on trustee responsibilities, but the
corporate structure reduces the threat of a lawsuit. He established the
company in 2005, but he remains its sole director as he looks for others. He
envisions three nonfamily directors serving on a board with four voting members,
along with two nonvoting members—one a family member serving on a rotating
basis, the other an independent trustee of the family’s Max and Bessie Bakal
Foundation.
The overhaul also entailed moving the trusts from Wisconsin to
South Dakota, a state that allows division of trustee duties and liabilities.
Practically speaking, the institutional trustee, South Dakota Trust, handles
administration of the trust, while the nonstock corporation manages distribution
and investments and has authority to hire and fire the administrative trustee.
This structure allows trustees to follow Bakal’s unusually specific requests.
To make certain the trustees and the family understand why no one is
entitled to payouts on request, Bakal wrote an 11-page document outlining what
he views as the family’s values. In one case, Bakal’s niece asked him if he
would consider it in the spirit of the trusts to pay for flying lessons for her
husband, who had wanted to be a pilot since childhood. Bakal looked into whether
his niece supported her husband’s wish, given its potential danger. He also
advised that they increase their life insurance coverage. Then he granted the
request.
Some advisors have told Bakal that it is unfair to withhold money
from family members. He was considering hiring one such advisor as a trustee
when she revealed this view. “She was furious,” Bakal says, recalling that she
was adamant that the funds should go to family members so they could live
interesting and enjoyable lives.
His own relatives, he fully admits, would
probably make more liberal spending choices, and they feel “neutral, at best,”
about his approach to trust planning. He maintains that they do recognize that
he is neither arbitrary nor mean-spirited, and that the rules apply to him as
well. Looking out his office window, he points to a stranger walking by. “Why is
it that we have it and he doesn’t?” he asks. “It isn’t because of our virtues or
anything that we did. I would like ongoing generations to appreciate—maybe not
to the extent that I do—but to appreciate it enough and not take it for
granted.”Portrait by Thomas Hart Shelby/Illustration by Allan
Burch.  Back to Main Article: The Top Estates
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