A recent developing story involving Stanley Chais, a friend of the infamous Bernie Madoff and participant in Madoff’s Ponzi scheme, outlines the potential perils that can plague an estate administration involving a bad actor. Stanley Chais’ estate is the subject of a recent settlement in California which, pending approval from a New York federal bankruptcy judge, is expected to provide approximately $15M in restitution to California’s attorney general and over $250M to a trustee recovering funds for Madoff’s victims.
Some portray Chais as a man duped by his dear friend. Others view him as a shrewd investment manager who knowingly capitalized on Madoff’s fraudulent behavior. Regardless of where the truth of Chais’ character and behavior lies, Chais, who died in 2010 of a blood disorder, has left the responsibility of resolving his matters to his estate.
We typically think of estate planning as providing a legacy for our loved ones, but oftentimes they must administer an insolvent estate or an estate subject to complex third party claims. Some third party claims are simply due to a decedent’s routine business dealings, while others may arise due to a decedent’s negligent behavior. The Chais estate highlights the fact that there may be longevity to an estate administration and the importance of engaging competent counsel who can guide you throughout the process.