Recent Developments

FLP by Estoppel: A
family limited partnership (FLP) was formed and hired an investment manager.
Years later the FLP sued the manager for providing lousy advice. The manager
moved to have the suit dismissed because the FLPs attorney failed to ever file
the certificate of limited partnership that the family signed with the state,
so the FLP wasn’t properly formed. The court applied a theory of estoppel and held that the investment manager had
earned fees for years from the FLP it could not now argue that the FLP was not
valid (it was “estopped” from making this argument). The court held the
partnership was valid. Since both sides engaged in business in a mutually
beneficial manner they could not argue that the entity wasn’t valid. The court
extended the doctrine of corporation by estoppel
to an FLP. Boslow Family Limited Partnership v. Glickenhaus & Co., 7 N.Y.3d 664 (Dec. 14, 2006). Hey, compare this
real case to the estate tax FLP cases where the courts have seized on the
miniscule violations of entity form to overturn FLPs and LLCs. Perhaps Judge
Laro could be encouraged to ponder this case for a while (See Estate of
Lillie Rosen).

Anna Nicole Smith Court
battles over her interest in billionaire J. Howard Marshall II’s estate may
continue following her death. Although J. Howard’s son, E. Pierce Marshall died
last year, his widow is continuing his side of the court battle. The Supreme
Court held that the general rule that state courts have final say on probate
and will contest matters didn’t apply because a bankruptcy issue, normally disputed
in federal courts, was involved. The bankruptcy judge could still continue to
hear the case. If Anna Nicole’s estate ultimately receives an award, presumably
her daughter Dannielynn will benefit, but a paternity suit might be necessary
to determine who her father, and perhaps guardian, will be.