NASCAR and Family Estate Planning

This guest post is from Andrew Hull, Regent Law 2L and current Wills, Trusts & Estates student:

It goes without saying that auto racing is a dangerous sport.  From the lowest levels of racing, like the go-karts I once raced, to the highest sanctioning bodies such as NASCAR, Indy Car, NHRA, and so on, death or serious injury sadly can and do occur.  And it greatly affects the driver's family.

The most high profile recent such incident in NASCAR was Dale Earnhardt Sr.'s crash in the 2001 Daytona 500.  Earnhardt, considered one of the greatest drivers in NASCAR history, was a 7-time champion and winner of 76 races.  He drove the famous #3 Chevrolet for Richard Childress Racing for decades, but he also owned his own team, Dale Earnhardt, Inc., which fielded three cars including that of his son, Dale, Jr.  

When Earnhardt was killed, he had a will leaving Dale Earnhardt, Inc. (DEI), Dale Earnhardt Chevrolet (his car dealership in North Carolina which is still in business today), and his home to his wife, Teresa.  In NASCAR, the team owners retain the rights to the car numbers, so Richard Childress Racing changed the 3 car to the 29 from the time of Earnhardt's passing in 2001 until bringing back the #3 in 2014 with Childress's grandson Austin Dillon behind the wheel.

Earnhardt's estate plan did not really become interesting until 2007.  That year, Dale Earnhardt, Jr. attempted to negotiate a 51% stake in DEI and remain with the team.  Teresa Earnhardt, who at that time remained in control of the company due to Earnhardt Sr.'s will, would not agree to such an arrangement.  As a result, Earnhardt Jr. would leave the team founded by his father in 2008 to drive for Hendrick Motorsports until his retirement in 2017.  DEI eventually merged with another team until it ultimately faded away some years later.  Sadly, there would continue to be litigation in the family as Teresa would seek exclusive rights to the Earnhardt name for merchandise and marketing purposes.

One wonders to what extent that Dale Earnhardt Sr.'s estate plan ultimately effectuated his intent.  It's hard to imagine that he wouldn't have wanted his son to eventually at least have some stake in the family business and keep DEI going.  Earnhardt was an exceptional case, being both a race car driver and a shrewd businessman.  Regardless, it has been sad to see his team fade into obscurity because his estate seems to have been handled quite ineffectively in the two decades since his passing. And it doesn't seem like that handling has been helpful in fostering comfort and healing to the Earnhardt family.