Key Takeaways
- Jerry Buss aimed to keep the Lakers in the family, but his plans have led to disputes.
- Jeanie Buss is opposing her siblings’ decision to sell their stake in the team.
- Legal experts suggest strategies to prevent family conflicts in business succession.
- Understanding trust structures can help wealthy families avoid similar issues.
Family Disputes Over Lakers Ownership
After Jerry Buss’s death, his intention was for the Los Angeles Lakers to remain within the family. However, the measures he put in place to ensure this have inadvertently caused rifts among his children, according to legal experts in trusts and estates.
Currently, five of Buss’s six adult children are in favor of selling the family’s remaining stake in the Lakers, which has been valued at $12.5 billion following a recent transaction. Jeanie Buss, the team’s governor, argues that her siblings lack the legal authority to proceed with the sale, which would jeopardize her position.
Reports indicate that Jeanie Buss has sought a court order in California to prevent the sale and to remove her siblings, Janie and Joey, from their roles as co-trustees of the family trust that holds the NBA franchise stake.
Understanding the Trust Structure
The family trust includes a unique “last man standing” clause, which Janie Buss described in a 2017 interview. This clause stipulates that upon the death of a sibling, their equity in the Lakers is transferred to the surviving siblings rather than their children, potentially encouraging siblings to sell while still alive.
Steven Fox, a partner at Buchalter, noted that while it’s common for parents to limit the number of stakeholders in a family business, such clauses are relatively rare. He expressed concern that this approach could unfairly disadvantage the children of a deceased sibling.
Strategies for Smoother Transitions
Legal experts suggest several strategies to facilitate smoother transitions in family businesses. One recommendation is to use life insurance to compensate family members. This can allow the trust to buy out the equity of grandchildren after a parent’s death, ensuring that the business remains within the family while providing financial support to the next generation.
Another strategy involves limiting decision-making power. Jerry Buss divided control of the Lakers equally among his six children, but designated Jeanie as the governor. Experts recommend that decision-making authority be concentrated in the hands of one or two children who are best suited to manage the business, while economic interests can be shared equally among all siblings.
Reassessing Family Involvement
Some experts argue that keeping family members out of management roles may be beneficial for the longevity of a family business. One successful family, for instance, has maintained a billion-dollar company for four generations by prohibiting family members from working there. This approach, while not applicable to the Lakers due to the public nature of the franchise, has proven effective for other businesses.
Ultimately, there is no foolproof method to prevent family disputes over inherited wealth. While some trust documents include clauses to discourage litigation among heirs, enforcing such provisions can be challenging. As Fox points out, the dynamics of inherited wealth often lead to conflicts that are difficult to resolve.
