Watson

Does the Course of Estate Planning ever Run Smooth?

Thomas Watson Jr left a pile of cash - more than one hundred million dollars - to be divided among his grandchildren. The money was in a trust fund activated on the death of his widow (he died before she did), by which time the couple had more than a dozen grandchildren.

Several grandchildren were adopted but one in particular was the centre of a legal brouhaha that may soon (as of July 2011) celebrate its tenth anniversary.

Thomas Watson's daughter Olive adopted Patricia Spado. At the time Olive and Patricia were lovers, and Patricia was, and still is, a year older than her mum.

A year after the adoption, the couple split. Olive gave Patricia a golden handshake of several hundred thousand dollars. Patricia also remained an adoptee and, as such, a granddaughter of Olive's father. And Olive's father's grandchildren were each entitled to several million dollars.

IBM = I've Been Manipulated(?)

Where did all of that Watson money come from? Thomas Watson Sr (1874-1956) founded IBM and cornered the market in business machines (IBM stands for International Business Machines), especially typewriters and then computers. Just as most computers today have Microsoft operating systems and other software, IBM's heyday, it totally dominated the market. It was the Microsoft of its day - until it was supplanted by Microsoft.

The founder's son Thomas (1914-1993), Olive's father, succeeded his father in running the company. Thomas Jr had six children, one of whom was Olive (her mother was also named Olive). He set up a well-endowed trust fund for his grandchildren.

Olive Watson and Patricia Spado became lovers in the mid 1970s. In 1991, Olive, 43, adopted her older girlfriend. They had been together for more than 15 years but only a year after the adoption, they split up. The relationship ended, but not the adoption.

When Thomas Jr's widow died in 2004, the trust funds could be distributed to the grandchildren, of whom there was 18 without including Patricia, and 19 with her. The trustees balked at paying Patricia.

The legal fight took on several dimensions, not least because several states were involved. Olive and Patricia lived in New York State, and Olive owned a second home in Maine, where the women vacationed and where the adoption was sealed. The elder Watsons lived in Connecticut, where the trust fund was registered.

In 2005, a probate court in Connecticut declared the adoption invalid, the judge declaring that “Watson did not intend to benefit someone who is adopted for no reason other than to obtain his money.”

But the adoption took place in Maine, one of a very few American states that, at the time, allowed adult adoptions. Lawsuits were filed in Maine, too, with trust lawyers arguing that the adoption was invalid because the women did not live in Maine.

In July 2007, a Maine court allowed the adoption to stand, and two years later, the state's Supreme Judicial Court upheld that decision.

After splitting from Patricia, Olive Watson adopted two infant boys. Their right to inherit as bona fide grandchildren of Thomas Watson is not being disputed.