Background
This case concerns the death of a billionaire who was the founder of a major transportation company. His name was Larry Hillblom, and after an airplane accident, he disappeared without a trace and was presumed dead. Due to the fact that he did not stipulate that illegitimate children would be unable to receive an inheritance, anyone who could prove themselves to be a child of Larry Hillblom would be a legitimate heir to his fortune. Hillblom had been extremely promiscuous in Southeast Asia and was likely to have multiple illegitimate children. Eventually, one filed a claim to the Hillblom estate. Larry Junior and his attorneys state that he is a biological son and could prove it through DNA testing. However, all DNA evidence of Larry Sr. was destroyed shortly after his death, with only a single mole left in possession of a hospital that will benefit from the inheritance. In addition, a law is soon set to pass that would prevent Larry Junior from having a claim on the inheritance. The estate is ready to settle with Larry Junior for 12 million dollars, but the attorneys state that the minimum settlement in the case would be 14 million dollars. However, the chances of victory are slim, and there are serious issues that need consideration. This paper will provide a decision tree to address these issues, decide whether Larry Junior should settle, and provide my personal opinion on the situation.
Decision Tree
Larry Junior’s Decision
Larry Junior’s situation is tied to a great number of variables, with each having its own probability. The first and perhaps the most important decision is whether he should accept the offer made by the estate. It would guarantee a $12,000,000 payout in the shortest time and with no extra cost to Larry Junior or his family. However, it would also prevent him from ever receiving the larger sums that he deserves as an illegitimate son of the billionaire. If the offer is rejected, Larry’s attorneys would have to deal with a number of challenges before a court case could happen. Although there is a possibility of failure before the court case can start, such as the Hillblom law passing and being deemed constitutional, DNA being unavailable or not matching Larry Junior, as well as failure in court, the benefits of going to court are very high. Their EMV totals $41,400,000 and even the smallest win would be higher than the initial settlement. However, the safest and perhaps the best option for Larry Junior would be to accept the second offer of $40,000,000. This amount of money is higher than the majority of positive outcomes and has no point of failure, unlike going to court.
Minimum Settlement Sum
By calculating the overall EMV of rejecting the initial offer of $12,000,000, it is possible to find the lowest possible settlement that Larry Junior should accept. The EMV of all decisions after the offer is rejected is $19,010,880.This means that no offer lower than $19,000,000 should be accepted by Larry Junior because there is a high possibility of receiving larger settlements after the initial rejection. Nevertheless, the initial offer presents many opportunities for Larry Junior and his family, and perhaps external factors could sway them to accept the initial offer.
What I Would Do in This Situation
While I am not a gambler, I would hope that by rejecting the initial offer, a larger one would be available in the future. The Hillblom law poses a serious threat to my case, but it is clearly being written with the intent of circumventing the text of Larry Sr.’s will, and I believe that there are serious arguments to be made against the implementation of such specific laws. However, just as I recommend to Larry Junior, I would settle for $40,000,000 after the DNA test matches my and Hillblom’s DNA. The court case could result in a loss or lower payout, and while larger payouts are appealing, their odds suggest that I would end up with less money than the estate is offering. In addition, I cannot ignore the impact that $40,000,000 would have on my life, especially as a child of a single mother in Southeast Asia, which would allow me opportunities that were previously unavailable to me such as higher education, a change of residence, a higher chance of employment due to further education, and all the necessities of life that were previously a struggle to obtain. I would not be able to bet the future of our family on a low possibility of success.
Other Issues
Larry Junior would need to consider the time that the court process would take, the possibility of inflation affecting the settlement, and the current value of even the initial settlement. It is possible that Larry Junior’s family is not in a position where they can wait for the process to be overdue to medical emergencies or socioeconomic factors. Therefore, the initial offer may be sufficient for them.