By: Barry E. Haimo, Esq.
January 10, 2019
Why the Last Will and Testament of Microsoft Co-Founder Paul Allen’s Will Take Years to Resolve
Paul Allen’s array of holdings sprawls at least a dozen industry categories umbrellaed under many more individual projects and organizations. Every decision regarding this estate will likely affect thousands of people.
What’s interesting – but also unsurprising – about this situation is that Paul Allen’s last will and testament is merely six pages long. In sum, his sister, Jo Lynn Allen (Jody) was named sole executor (called “Personal Representative” in Florida) of the will and trustee over the entire estate, leaving her the responsibility for overseeing the execution of his will and settling his affairs.
Jody co-founded Vulcan, Inc. with him, and has managed much of the family’s business and charitable endeavors for a very long time. Some describe her as being ‘responsible for having the trains run on time,’ but we expect she will lean heavily on the many teams already in place.
Several top executives within Allen’s organizations have released concurring statements. They don’t expect too much change in the foreseeable future.
Without knowing the intricate details of the individual (and private) succession plans believed to be in place, we can reasonably guess the same by looking at just three holdings within Vulcan, Inc.: Vulcan Real Estate, The Museum of Pop Culture (or MoPOP), and the Seattle Seahawks.
Vulcan Real Estate
This real estate corporation contains a commercial portfolio estimated to value $1.5 billion.
Normally, the company would have nine months after Allen’s passing to file federal tax returns, but due to the size and complexity of his estate, it will likely be subject to an IRS corporate audit. This can add years to processing time.
Auditors typically schedule three months to plan, audit, and compile the report, and they are usually working on multiple projects during that period. With Paul Allen’s estate, they may dedicate a team of auditors and divvy out a number of entities to each.
The IRS has 36 months from filing date (likely nine months after Allen’s passing) to examine the return(s). Twenty-eight months are for audit fieldwork and reporting. The other eight are allotted to appeals processing, should any protests surface. Extensions are granted in special cases, for example, if the Service determines there is evidence of serious violation.
Nine months to file plus thirty-six months auditing? That is nearly four years to settle just the taxes on this single company within the vast network of organizations under the Allen estate. Only when past taxes are settled can the real estate firm look forward and begin carrying out any succession plan Allen may have offered.
Seattle-based non-profit, The Museum of Pop Culture, was originally founded in the year 2000. It has since become dedicated to contemporary popular culture, intending to make creative expression a life-changing force via inspiring experiences and community connection.
According to the MoPOP’s published 2017 Annual Report, the organization has directly served more than 150k youth and hosted nearly 700k visitors onsite. Total assets were valued at $144 million including cash, equivalents, property, and equipment.
Although we can’t be sure what the future holds for the non-profit at this time, one option is to dissolve. Should Jody decide this is the best plan of action, dissolution requires following a series of steps in order to officially shut down via a process typically referred to as “winding down.”
Throughout the process, officials are communicating with the community, employees, volunteers, donors, and others affected about the decisions being made and what they may expect as the organization shuts down. And only once the IRS annual report filings are complete – remember the initial nine months to file – is the process 100% complete.
Then, additional corporate actions often need to be taken beyond that last day of active operations over several months to years after operations have ceased.
We can estimate a year or two, minimum, dedicated to shuttering this single philanthropic endeavor among many that are part of Paul Allen’s estate.
Finding new ownership for sports teams in general is a stringent and lengthy process. For the NFL in particular, owners have to meet a number of requirements, meaning even the most straightforward sale of the Seattle Seahawks is likely to take a while.
Besides negotiating aspects of a multifaceted organization, there are intricate rules for how ownership can and cannot be split and what kind of other sports teams they can and cannot own in conjunction with the NFL team. They also cannot own any kind of gambling-related business, among other things.
Ultimately, the buyer must be approved by the entire league before the sale can go through. Allen’s estate controls three major sports team franchises.
And There Is So Much More
These were only three relatively small slices of Paul Allen’s 26-billion-dollar pie to be evaluated, decided upon, and divvied up.
Considering that a single person, his sister, has essentially been left to manage all of Paul Allen’s affairs, we can only hope there were in fact unpublished succession plans offered up in private to each organization. Even then, given the pace of directing the simplest tasks in day-to-day operations of any workplace, you can imagine what this means for timing on the resolution of an estate like this.
Barry E. Haimo, Esq.
Strategic Planning With Purpose®
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