Donald Sterling and the Trust Incapacity Lesson Behind the Clippers Sale
Most people remember Donald Sterling’s fall as an NBA scandal. The leaked recording, the league response, and the $2 billion sale of the Los Angeles Clippers all made national news.
But one of the most important legal battles was not really about basketball. It was about a family trust.
In 2014, while Donald Sterling fought to keep control of the Clippers, Rochelle “Shelly” Sterling moved to sell the team to Steve Ballmer. Her authority came from language in the Sterlings’ 1998 revocable living trust. That trust included a specific process for removing a trustee who could no longer manage trust assets. (See Sterling v. Sterling, Cal. Ct. App. 2015).
That detail mattered. The Sterling Family Trust reportedly held the Clippers and billions of dollars in real estate. Once Donald was removed as co-trustee under the trust’s incapacity provision, Shelly became the sole trustee with authority to complete the sale.
The case offers a sharp estate planning lesson: incapacity planning is not limited to hospital rooms and health care decisions. It can decide who controls a business, signs contracts, manages real estate, and protects family wealth when a decision-maker loses capacity.
Disclaimer: This article is for general information only and is not legal advice. Trust law is state-specific, and anyone dealing with trustee incapacity should speak with a qualified attorney.
The trust provision that changed control of the Clippers
The Sterling Family Trust included a process for determining when a co-trustee no longer had the capacity to serve. According to court records (Sterling v. Sterling, 2nd Dist. Court of Appeal, 2015) and public reporting from the dispute, that language required written certification from two licensed, independent physicians.
The doctors had to determine whether Donald Sterling was cognitively impaired under standards tied to California Probate Code section 810.
That point is easy to overlook, but it was central to the outcome. Shelly did not have to start from scratch and prove incapacity through a brand-new court proceeding before acting. The trust itself laid out a private governance process.
The two-doctor rule
The trust reportedly provided that Donald Sterling would cease serving as co-trustee if two licensed physicians certified in writing that he lacked the capacity to manage trust affairs.
Two doctors evaluated him (Sterling v. Sterling, 2015):
Dr. Meril Sue Platzer, a neurologist
Dr. James Spar, a geriatric psychiatrist
Both concluded that cognitive impairment created serious concerns about judgment, memory, and financial decision-making.
Once those certifications were in place, the trust terms operated as written. Donald was removed as co-trustee. Shelly, as the remaining trustee, had authority to manage trust property, including the Clippers.
Why the wording mattered
Trust incapacity language can be vague or precise. The Sterling trust used a defined trigger. That made the process stronger.
A weak clause might say something like, “A trustee may be removed if incapacitated,” without explaining who decides, what proof is required, or when the removal takes effect.
A stronger clause answers practical questions:
Who can request an incapacity evaluation?
How many medical opinions are needed?
Must the doctors be independent?
What legal standard applies?
Does removal happen automatically when the standard is met?
Who becomes successor trustee or sole trustee?
Can the removed trustee challenge the determination?
What happens during a dispute?
In the Sterling case, those details were not academic. They affected control of a multibillion-dollar asset.
Incapacity is not the same as a conservatorship
One common misconception is that trustee incapacity always requires a public court battle or a full conservatorship. The Sterling dispute shows the difference.
A conservatorship is a court-supervised legal arrangement. It can give someone authority over another adult’s personal care, finances, or both. It is often public, time-consuming, and emotionally difficult.
A trust incapacity provision works differently. It is a private rule inside the trust agreement. If the trust owns the assets, and if its incapacity trigger is satisfied, the successor trustee or remaining trustee may be able to act without first obtaining a conservatorship.
That distinction can save time at the exact moment when delay is most dangerous.
Governance tool | How it works | Common use |
Trust incapacity provision | A private mechanism written into the trust. It defines how a trustee is removed and replaced after incapacity is established. | Managing assets already titled in the trust, such as real estate, business interests, investment accounts, and personal property. |
Conservatorship | A court process where a judge appoints someone to manage another adult’s personal or financial affairs. | Situations where no effective private plan exists, assets sit outside the trust, or broader personal care authority is needed. |
Power of attorney | A document that authorizes an agent to act for financial matters during life. | Handling assets or accounts not held in trust, depending on the document and institution rules. |
Advance health care directive | A document naming someone to make medical decisions if the person cannot do so. | Medical care, treatment decisions, end-of-life preferences, and access to health information. |
A well-built estate plan often uses several tools together. The trust controls trust assets. The power of attorney covers non-trust financial matters. The health care directive covers medical decisions.
The danger comes when people sign only one document and assume it covers everything.
California capacity rules focus on the ability to make decisions
California Probate Code section 810 starts from a basic presumption: adults are presumed to have capacity unless proven otherwise. It also recognizes that capacity is task-specific.
That means a person may be able to make some decisions but lack capacity for others. For example, someone might understand a simple household purchase but struggle to evaluate a complex business sale, tax risk, or litigation strategy.
In trust administration, the key question is often practical: can the trustee understand and manage the duties required by the role?
A trustee may need to:
Review financial statements
Hire and supervise advisors
Negotiate contracts
Decide whether to sell or hold assets
Track tax issues
Avoid conflicts of interest
Communicate with beneficiaries
Protect trust property
For a trust holding ordinary assets, those duties can still be demanding. For a trust holding a professional sports franchise and significant real estate, the burden is far greater.
That is why incapacity provisions should match the real assets in the trust. A family with a small home and bank account may need one level of planning. A family with rental properties, a closely held business, or large investment accounts may need more detailed rules.
The Sterling case shows why private planning can matter in a crisis
The Clippers sale happened under extreme pressure. The NBA had moved against Donald Sterling after the racist recording became public. Sponsors, players, fans, and league officials all pushed for a change in ownership.
The trust issue became the path to completing the transaction. Shelly Sterling used the incapacity provision to remove Donald as co-trustee, then proceeded as sole trustee.
Donald challenged the process in Los Angeles Superior Court Probate Division (In re Sterling Family Trust, Case No. BP152285). The dispute went to trial, but the trust language gave the court a concrete framework to analyze what had happened. The question was not simply whether Shelly thought Donald should be removed; the question was whether the trust’s stated standard had been met.
That is a powerful difference.
When a document is vague, families often end up fighting over intent. When a document is specific, the dispute shifts toward evidence and procedure.
Neither path guarantees harmony. But clear drafting can reduce confusion, limit delay, and make it harder for one person to paralyze trust administration.
What a strong incapacity clause should cover
A revocable living trust often names the person who created it as initial trustee. If a married couple creates a joint trust, both spouses may serve as co-trustees. The trust then names successor trustees who step in after death, resignation, or incapacity.
The incapacity section should not be an afterthought. It should state exactly how a trustee is found unable to serve.
Who decides incapacity
Some trusts require one doctor. Others require two. Some allow a panel of family members, a private fiduciary, or a court to decide. Some use a mix.
Medical certification can add credibility, but the clause should define who qualifies. The Sterling trust’s use of independent licensed physicians helped avoid the appearance that one spouse simply picked a friendly opinion.
For complex estates, independence matters.
What standard applies
The clause should connect incapacity to the trustee’s actual job.
A person might be physically ill but mentally sharp. Another might have memory loss that makes financial management unsafe. The trust should avoid broad labels and focus on the ability to administer trust property.
Good drafting often looks at whether the trustee can understand, communicate, and carry out financial decisions.
When removal takes effect
This can be the most important timing issue.
Does removal happen when the doctors sign the letters? When the letters are delivered? When a successor trustee accepts? After a waiting period? Only after court confirmation?
If the trust does not answer that question, the family may lose valuable time.
Who takes over
The trust should identify the next person or institution with authority to act. It should also cover what happens if that person is unavailable, unwilling, conflicted, or also incapacitated.
For high-value assets, the successor trustee should have the skill and temperament to act quickly.
That person may need to deal with lenders, tenants, employees, accountants, attorneys, or business partners. A trusted relative is not always the right choice if the assets are complex.
The biggest estate planning lesson is control
The Sterling dispute is unusual because of the numbers and the fame. Few trusts hold an NBA franchise. Fewer still involve a $2 billion sale under national scrutiny.
But the legal issue is common.
Many families own assets that require active management:
Rental homes
Family farms
Small businesses
Professional practices
Investment properties
Vacation homes
Mineral rights
Brokerage accounts
Private company interests
If the trustee becomes impaired, someone must be able to keep bills paid, sign leases, renew insurance, respond to lawsuits, file taxes, and make decisions.
Without a workable incapacity clause, assets can sit in limbo. Family members may disagree about who has authority. Banks and title companies may refuse to act. A business partner may not know whose signature counts.
The result can be delay, cost, and lost value.
A trust is supposed to avoid that. But it only works if the document gives clear instructions and the assets are actually titled in the trust.
A revocable trust should be reviewed before incapacity happens
The worst time to discover weak trust language is during a family emergency.
Anyone with a revocable living trust should review the incapacity provisions while everyone still has capacity. This matters even more after major life changes.
A review is especially useful after:
Marriage, divorce, or remarriage
The death of a spouse or named trustee
A new diagnosis affecting memory or judgment
A move to another state
The purchase of real estate
The creation or sale of a business
A major change in family relationships
A large increase in net worth
A long gap since the trust was signed
The review should ask a few direct questions.
Does the trust name the right successor trustees? Does it require one doctor or two? Are the doctors required to be independent? Does it define incapacity clearly? Does it cover temporary incapacity? Does it give the successor trustee immediate access to records? Does it coordinate with powers of attorney and health care documents?
These questions are not just technical. They decide whether the plan works under pressure.
The lesson behind the Clippers sale
Donald Sterling did not lose control of the Clippers only because of public pressure from the NBA. The trust dispute played a central role. The language in the Sterling Family Trust allowed Shelly Sterling to rely on medical certifications, remove Donald as co-trustee, and act as sole trustee.
That is the real estate planning lesson.
A trust does more than say who gets property after death. During life, it can decide who controls major assets when capacity fails. If the trust is clear, the next person in charge may be able to act with confidence. If the trust is vague, the family may end up in court while assets wait.
The Sterling case is famous because it involved a sports franchise. The same issue can arise with a duplex, a family business, or a brokerage account.
A good trust should answer the hard question before anyone needs to ask it: if the trustee can no longer make sound decisions, who has authority to protect the assets?
Primary Sources Referenced:
Sterling v. Sterling, 242 Cal. App. 4th 1092 (Cal. Ct. App. 2015).
California Probate Code § 810 et seq. (Presumption of Capacity and Capacity Evaluation Standards).
Los Angeles County Superior Court Probate Division Records (Case No. BP152285).
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