What Aaron Hernandez Should Do.

Posted by David E. Peterson, Esq. on July 2, 2013 under Uncategorized | Be the First to Comment

Aaron Hernandez needs some serious legal help, but not from a criminal lawyer, from an estate planner. It’s become increasingly clear that Hernandez is guilty of at least one murder, possibly more. Although he’s got an experienced and high priced legal defense team, odds are that he’s going to jail for the rest of his life.

Let’s take a closer look at the situation. Hernandez was towards the beginning of a $40 million contract. NFL contracts are complicated, but typically include signing bonuses, guaranteed payouts, and incentive pay. This article says that Aaron Hernandez has received about $10 million thus far from the Patriots. Assuming that he’s got half of it left (he’s probably not investing like Warren Buffet), that’s still $5 million.

Given the overwhelming evidence against him, it’s unlikely that the hundreds of thousands, or millions, of dollars that Hernandez could spend on legal fees will provide him with any benefit. And as we remember from the O.J. Simpson debacle, after the criminal trial, we get to have a civil trial as well. The difference here is that if Hernandez is found guilty in the criminal trial, then the burden of proof will have already been met for the civil trial. Essentially, all of Aaron Hernandez’s money is going to legal fees, and to his victim(s)’ families via a wrongful death judgment/settlement.

So what’s a tight end turned murder defendant to do? For starters, he could swallow his pride, accept his fate, and focus on providing for his family. Aaron Hernandez has an infant daughter. A few weeks ago she was on track for a privileged life. Now, not so much. But Hernandez still has the money to give her that privileged life.

I would suggest that instead of blowing his net worth on legal fees, he establish a trust for the benefit of his daughter, and find a way to get as much money as possible into it. Look at it this way: he’s either going to pay for his kid to go to college, or his lawyer’s kid to go to college.

Unfortunately for baby girl Hernandez, once you commit a major tort, like MURDER for example, you lose much of your ability to disburse assets. If Hernandez places money in trust for his daughter, and is then found civilly liable for his actions and is unable to compensate the victims, then he’s made a fraudulent conveyance, which the court will unwind.

Overzealous asset protection attorneys have found a way around fraudulent conveyance laws, but it’s not for the faint of heart. It would involve Hernandez placing his money into a trust located in an offshore haven, like the Cayman Islands, or the Cook Islands. The terms of the trust would prevent the trustee (an offshore trust company) from ever returning the money, even if an American court determines that it was fraudulently conveyed to the offshore trust.

American courts have responded to these strategies by placing the grantors in prison for contempt of court. For most of us, the threat of incarceration would deter us from committing this fraud. But Aaron Hernandez is going to jail for murder anyways, so it makes no difference to him whether he’s also convicted of fraud, or held in contempt of court.

However, Hernandez doesn’t have the mental capacity to establish an offshore asset protection trust… because they’re very complicated… and he’s very stupid. This is the guy that murdered someone a few blocks from his own home after all. So why doesn’t he just have his fancy lawyers set up his trust? Well, for starters, lawyers can get in big trouble for advising their clients to commit fraud. If he’d asked Ropes and Gray to set up an asset protection trust before committing murder, they probably would have jumped at the chance. Now, not so much.

Which again begs the question, what should Aaron Hernandez do? Here is what I propose.

Aaron should direct his lawyers to negotiate a wrongful death settlement with his victim(s)’ families that compensates them with the majority of his money, but leaves a million or two for his daughter. In exchange for this settlement agreement, Hernandez would plead guilty in his criminal trial, and accept liability in his civil trial. Either way, Aaron is going to spend the rest of his days in Shirley, Massachusetts, which is a beautiful little town with two maximum security penitentiaries. But my approach provides for his family and his victim(s)’ families, while keeping him and his attorneys clear of fraudulent conveyance laws.

Of course this is highly theoretical. We don’t know whether Hernandez has enough money left for this to be feasible. And of course we know he won’t actually do it. He’s got an ego so big that he killed someone over a nightclub dispute, so I don’t think that he’ll put his family ahead of himself. It’s tragic, but fascinating from many different legal perspectives.

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