If you own a business, can you leave someone a job through your will or trust? A trust litigation case held that, yes, in some very narrow circumstances you might be able to do so, but in the case before it, like would be expected in most circumstances, the will did not create lifetime employment as claimed by the deceased’s son. Grant v. Bessemer Trust (4th DCA 2013).
Milton Grant was the owner of Grant Communications, which owned a number of television stations. Milton’s will was a “pour over” will, which left all of his assets to a trust for the benefit of Milton’s three children, his wife (from whom he was separated), and a longtime companion.
While the stock in Grant Communications was held in the estate, all decisions were to be made by the corporate trustee, Bessemer Trust. After the stock was distributed to the trust, all decisions regarding the stock were to be made by the trust’s business trustee, a lawyer named Jack Lewis.
Milton had a son, Thomas, who worked at Grant Communications. Thomas was never promoted past the job of sales manager of a single television station during Milton’s lifetime. He was never a station manager, and never worked at the corporate headquarters.
After Milton died, the CEO of the company gave Thomas the job of national sales manager at the salary specified in the codicil. Sixteen months after Milton’s death, the CEO fired Thomas. Thomas then sued in probate court for his job back and for his salary.
Working in Thomas’s favor was a provision in a codicil to Milton’s will that left Thomas a job:
Employment provision for Thomas Jeffrey Grant. It is my intention that [Thomas] continue to be employed in a suitable and reasonable position in connection with the operation and management of my television station group. Accordingly, I hereby direct my Personal Representatives to make the necessary arrangements with my Business Trustee to ensure
such employment and to ensure that his annual salary shall be no less than $125,000 per year, appropriately adjusted for annual cost of living increases.
Working against Thomas were a number of factors.
The will and trust instruments that left Thomas the job all contained the following provision regarding the ability of the personal representative or trustee to run the company:
to engage, compensate and discharge, or as a stockholder or director of any such corporation, to vote to engage, compensate and discharge such managers, employees, agents, attorneys, accountants, consultants, advisors, or other representatives of any such business or corporation as may be deemed advisable, including, without limitation, any fiduciary under this will or an officer or employee of any corporate fiduciary under this will or any person who is a beneficiary under this will.
In other words, the specific power to fire anyone, including beneficiaries.
There was ample testimony that Milton wanted his CEO to have complete control over the company. There was also testimony that Milton did not have confidence in Thomas’s ability to run the company. Thomas was never brought into corporate decision making. Important information about the company was never shared with Thomas.
Can a Job For Life Be Left In A Will?
The probate trial court held that the employment provisions in the codicil did not grant Thomas a lifetime job with the company. The Court reasoned that employment is not a real/personal property interest as that term is defined in section 731.201 of the Florida Probate Code:
Employment is incapable of being devised or bequeathed in a will.
The court also held that the right to employ Thomas, or the determination of the length of such employment, was not a right that Milton owned upon his death, but rather [was] a decision that belonged to Grant Communications. While Milton was alive, and as an officer, director and/or owner of a hundred percent of the stock, he could have, on behalf of Grant Communications, entered into an employment contract for a determinate or indeterminate period of time with Thomas. For whatever reason, whatever reason that may be, he chose not to do so.
The court also noted that the second sentence as written merely directs the personal representative to see to it that upon Milton’s death, Thomas is employed with Grant Communications at a salary of $125,000 per year, to be annually adjusted for cost of living increases. Implicit, however, with such direction, is that such employment is at will, and that Thomas is subject to dismissal upon reasonable grounds.
The appellate court affirmed the decision.
The court’s determination in part rested on its conclusion that employment could not be devised. We need not determine whether any type of employment can be the subject of a testamentary direction, because we conclude that the court correctly found that this employment within Grant Communications could not be the subject of a testamentary direction binding upon the officers and directors of the various companies in the conglomerate. To so find would conflict with the fiduciary duties of officers and directors to the corporation and its creditors. See § 607.0830(1), Fla. Stat.; In re Aqua Clear Techs., Inc., 361 B.R. 567, 574 (Bkrtcy. S.D. Fla. 2007).
Directors and officers must act in the best interests of the corporation, not the employee. The trial court acknowledged this when it found that Milton could not bind the decisions of the officers and directors of the corporation after his death. His own trust documents acknowledged as much by giving to the personal representative and business trustee the power to hire and fire employees, even beneficiaries under the will and trust. A testamentary direction to guarantee Thomas employment within the company, regardless of circumstances or detriment to the corporation, could compel the violation of fiduciary duties of the officers and directors to the corporation. This would be a violation of statutory duties and the public policy behind them.
Situations Where A Job Has Successfully Been Left In A Will
The appellate court addressed two cases in which employment provisions were upheld, possibly giving a roadmap for testators who wish to provide a job through testamentary documents.
In In re Pittock’s Will, 102 Or. 159, 199 P. 633 (1921), a provision in favor of trustees to vote themselves in as directors of company was upheld. There was evidence as to the crucial role that such individuals had with the company. The Florida court, in distinguishing, held:
We glean from this that, even though precatory, the provision was made for the benefit of the corporation as opposed to the benefit of the testator or a third party. In contrast, the employment provision in this case was not for the benefit of the corporation but solely for the benefit of Thomas.
In Howell v. Sykes, 526 S.E.2d 183 (N.C. Ct. App. 2000), the sole shareholder of a corporation devised her shares to her nieces specifically subject to an agreement that the shareholder made with one of her employees that he receive his same annual salary for life. The corporation and one of the nieces brought suit for declaratory judgment to determine the interpretation of that clause. The trial court construed the clause as imposing a lien on the shares of stock bequeathed to the nieces for the amount of the lifetime salary. The Howell court imposed he employment provision as a lien on the stock that had been bequeathed. The Milton stock was not specifically bequeathed, making the employment provisions inapplicable.
In sum, the Court held:
Milton placed great trust in his business trustee and the people he chose to run the company. We think the trial court correctly construed the employment codicil to reflect Milton’s present intention of wanting Thomas to continue working for his companies but giving deference to his fiduciaries’ responsibility to the corporation as to Thomas’ future employment.