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Ken Lay's Will

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from: Bonnie Goldstein

Posted Monday, Oct. 30, 2006, at 5:10 PM ET

Kenneth L. Lay, founder and chairman of the now-bankrupt Enron Corporation, and his successor, Jeffrey Skilling, were convicted of conspiracy and fraud last spring. Skilling was sentenced on Oct. 25 to 24 years in prison plus victims' restitution of $45 million, but Lay died of a heart attack July 5, before he could exercise his right to appeal. As is customary in such instances, the court vacated Lay's criminal conviction. This immediately freed Lay's estate from attempts by Lay's victims (i.e., Enron stockholders and employees) to recover their losses via the U.S. justice department. There may still be civil penalties against her husband's estate by the SEC, but Lay's widow, Linda Lay, will not have to pay restitution.

When Enron tanked in late 2001, Linda told NBC, "There's nothing left. Everything we had was mostly in Enron stock." The couple sold several of their luxury homes, and Linda opened a secondhand store, Jus' Stuff, to sell off surplus furnishings. But the New York Times reported that the Lays still "owned at least $8 million in stock in two outside companies … another $25 million in real estate holdings, various properties in Aspen, Colo., and their Houston apartment." Mother Jones added that Mrs. Lay was further protected by a substantial life-insurance policy (tax-free) and by paid-up annuities. According to Lay's will (below), Linda, as the principal beneficiary, receives directly or in trusts all assets of her husband's estate. There are no immediate charitable endowments like Lay's past gift of $1.1 million to the University of Missouri for the unfilled, ahem, Kenneth Lay Chair in International Economics. The only nonfamily bequests Lay made will be effective only after Mrs. Lay dies, and then only provided the value of the trusts exceeds "a total net fair market value of TEN MILLION DOLLARS." If the threshold market value is reached, then $1 million will go to a scholarship fund of the Horatio Alger Association of Distinguished Americans, and two smaller bequests of $100,000 will go to Lay's church and to the Houston-based M.D. Anderson Cancer Center. (To read the entire will in PDF format, click here.)

Note: In paragraph 2.2, the "applicable exclusion amount" is the value of inherited assets excluded from gift or estate taxes. Currently, up to $2 million can be bequeathed in the U.S. tax-free. Lay leaves this and the rest of his fortune to his wife in a trust called the Ken Lay Trust, for Linda's primary benefit.

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hot document
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from: Bonnie Goldstein

Posted Monday, Oct. 30, 2006, at 5:10 PM ET
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Bonnie Goldstein is a former special investigator to the U.S. Senate and investigative producer for ABC News.
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