World

Feinstein Battle Over Her Late Husband’s Fortune Heads to Mediation

A judge in San Francisco on Monday ordered the two factions of Senator Dianne Feinstein’s family fighting over the estate of her late husband, the wealthy financier Richard C. Blum, to try to settle the case through mediation.

The order, which both sides agreed to, came as the lawyers in the case appeared in a courtroom for the first time after trading hostile accusations in legal filings over the summer.

On one side is Senator Feinstein, who at 90 is in declining health and has faced questions about her ability to carry out the duties of her job, and her daughter, Katherine Feinstein, a former San Francisco judge. On the other side are the three daughters of Mr. Blum from a previous marriage, and his former business partners who are the trustees of his estate.

In three separate lawsuits, Senator Feinstein, with her daughter serving as her legal representative, is fighting to sell a multimillion-dollar vacation home in Stinson Beach, north of San Francisco; seeking proceeds from the estate, including from Mr. Blum’s life insurance policy, to pay for her medical expenses; and asking the court to allow her to appoint Katherine Feinstein as a trustee of the estate.

Taken together, the bitter fight over the family fortune and the senator’s health woes have made for a painful final chapter to a successful career in public life that began in 1970 when Ms. Feinstein became a member of San Francisco’s board of supervisors. She went on to serve as mayor of San Francisco, and is currently in her sixth term in the U.S. Senate. Senator Feinstein, a Democrat, has said she will not run for re-election next year, but has resisted calls to step down before her current term ends.

Because of the parties involved, an estate dispute that might have unfolded discreetly in a nook of the San Francisco courthouse has instead become a public example of how tensions between family members over divvying up a fortune can turn ugly.

The trusts that Mr. Blum set up are meant to provide income to Senator Feinstein during her lifetime but save the principal assets, like properties, for Mr. Blum’s three daughters, who would inherit them upon Senator Feinstein’s death. The senator’s lawsuits accuse the trustees of trying to maximize the inheritance for the three daughters.

The trustees have accused Katherine Feinstein of pursuing her own interests rather than her mother’s, and have pointedly asked questions about Senator Feinstein’s abilities to navigate the legal feud, including a legal parry that appeared to nod to her challenges serving in Washington.

In a recent filing, they questioned how Senator Feinstein had the “capacity” to appoint a trustee — her daughter — “yet seemingly cannot file the petition in her own name.”

On Monday, John A. Hartog, an attorney for Katherine Feinstein, asked Judge Roger Picquet to order the trustees to sell the house immediately “at a commercially reasonable price,” and place the proceeds in an escrow account while the broader issues over the estate were resolved, either through mediation or trial. He said the property had not been maintained properly for years.

The judge declined to do so. A lawyer for the trustees raised the possibility of renting the beach house to generate income.

Judge Picquet, who serves on the bench in San Luis Obispo, scheduled a hearing for January, by which time mediation is expected to conclude in what he deemed “a significant case.” If mediation fails, Judge Picquet said he would schedule a jury trial for sometime next year.

The younger Feinstein appeared remotely at Monday’s hearing, but the senator and Mr. Blum’s daughters did not. Compared with the legal filings this summer, the courtroom discussion on Monday was tepid.

Senator Feinstein has faced questions about her cognitive abilities for some time, but they intensified when she returned to work this year after being absent with a bout of shingles and other issues. She now relies heavily on aides to do her job and shield her from the press.

Last week, in her first public comment on the estate case, she told The San Francisco Chronicle: “I’ve asked my daughter to handle the case. And it’s so I can focus on what I’m doing back here in Washington. It’s a difficult time for me, and so I really don’t have time for other things.”

But The Chronicle said that when a reporter first approached Senator Feinstein after a Senate hearing earlier in the day, she said she “gave no permission to do anything.”

Her mounting health care costs, and whether Mr. Blum’s estate should pay for them, are some of the issues being litigated; Katherine Feinstein has accused the trustees of “financial elder abuse.” The trustees have denied that they have refused to pay, arguing that they simply need more time to settle the complicated estate.

Mr. Blum, who died in February 2022, was often referred to in published reports as a billionaire. But according to people familiar with his finances, Mr. Blum died with less wealth than some had expected. They said that the coronavirus pandemic had eaten into his wealth, especially his holdings in hotels.

The trustees said in their filing that in June, Senator Feinstein asked to be reimbursed $169,055.19 for medical expenses, and for the estate to pay the $9,166 monthly salary for her security guard and caretaker.

In a recent filing, the trustees pointed to Senator Feinstein’s own wealth, including approximately $1 million in annual income, a quarterly $125,000 disbursement from another of her late husband’s trusts, and a net worth of more than $50 million. The trustees have said that they are required to consider her other means of support before releasing funds from the estate.

She was already wealthy when she married Mr. Blum, her third husband, in 1980.

Because Katherine Feinstein once served as a judge in San Francisco, Judge Picquet was appointed to hear the case to avoid any conflicts of interest. The judge said that he would consolidate the three lawsuits that Senator Feinstein has filed, and that he hoped mediation could resolve all the issues.

“I’m looking for a global outcome if we can get it,” he said.

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