Every great New York real estate fortune eventually turns into a governance problem. The Milsteins, who built theirs out of a flooring business, have now had three of them.
The latest arrived in New York County Supreme Court, where Constance J. Milstein, the 80-year-old granddaughter of patriarch Morris Milstein and a former United States ambassador to Malta, has sued to remove the trustees of a family trust. Her targets, the New York Post reported on Monday, Nov. 9, are not only the trustees, Peter Grossman and James Sligar, but her brother Philip L. Milstein and her two daughters, Abigail Black Elbaum and Joanna M. Milstein, whom her lawyers describe as “her adversaries.”
The case is captioned Constance J Milstein v. Peter A Grossman et al. Her claims are allegations, and the family disputes them.
The allegations
According to the petition, as described by the Post, Grossman and Sligar told Connie Milstein in the summer of 2025 that they had “decided to cease making” monthly distributions of $125,000 to her from a trust held in the name of her mother, Vivian Milstein. Around the same time, she says, Philip issued a drawdown notice demanding that her trust contribute $2.5 million to the family business by September 2025. Her lawyers say both moves were meant to pressure her in settlement talks over the family’s business interests, and that the trustees, given “their intimate familiarity with Connie’s finances,” knew she relied on the money.
Her lawyers say the family took advantage of her years in Valletta, where she served under President Biden, to wrest away control of her rights and assets. They call Grossman and Sligar the “Faithless Fiduciaries.” Grossman oversees Ogden Cap Properties, the company that manages this branch’s holdings. Sligar’s firm, Milbank, had for years been her own trust-and-estate counsel, her lawyers note.
The answer
The other side has answered in kind. A filing seeking dismissal says the trust was created “for the express primary benefit of Connie’s two children,” and that Connie is “far from cash poor,” having spent about $23.5 million in the past few years. A memorandum from the trustees’ lawyers lists the spending: $7 million on a Montreal residence, more than $8 million on two New Hampshire homes, more than $5 million on jewelry and other personal items, and $3 million on an annual private aviation contract. They note that she recently sold jewelry at auction for $7.5 million. Under the trust’s terms, they argue, the power to remove trustees belongs to the daughters as primary beneficiaries, and Connie is merely a “discretionary beneficiary” with other trusts of her own.
“It is regrettable that a private family matter has come to litigation,” a spokesperson for Philip Milstein and his family told the Post. “The petition itself is full of hyperbole and innuendo but has no merit and lacks any legal or factual basis.” Connie Milstein’s lawyers called the counterfiling “a pathetic attempt at distraction.”
Rounds one and two
The family has been here before. Morris Milstein’s sons, Seymour and Paul, turned Circle Floor into a real estate and banking empire, buying Emigrant Savings Bank, the city’s oldest savings bank, in the 1980s. Forbes credits the family with developing 50,000 apartments, 8,000 hotel rooms and 20 million square feet of office space, and puts its wealth at about $3.1 billion, according to the Post.
The brothers then fell out over the succession. Paul wanted his son Howard to run the business; Seymour preferred to split it. In 1999, Philip sued his cousins Howard and Edward over the management of Douglas Elliman. In 2000, Paul and Howard sued to remove Philip as head of Emigrant, accusing him of “dictatorial control.” The fight was settled in 2003, after Seymour’s death. Howard kept Milford Management and Milstein Properties, and Emigrant went with him. Philip co-founded Ogden CAP Properties with Connie and her daughter Abigail to manage their side’s share.
That was round two. Round three is the same question, a generation down: who controls the money that the founders made, and on whose terms.
The governance lesson
There is a reason trust lawyers in Manhattan keep stacks of these cases on their desks. A family company can survive a disagreement about strategy. What it cannot easily survive is a structure in which the people who manage the assets are also the beneficiaries, the counterparties and the relatives of the person who depends on the payout. In this case the daughters are, by the trustees’ reading, the primary beneficiaries of the trust that paid their mother. Abigail is also a principal of the family company that wants the $2.5 million, and a trustee of Columbia University. The trust’s lawyer used to be the mother’s lawyer. Every one of those roles may be perfectly proper. Together they make a lawsuit almost inevitable once trust breaks down.
Connie Milstein once described the family business to a panel of women in real estate in terms that now read as prophecy. “It’s difficult to work in a family business,” she said, as the Post recounted. “In order to get along, you have to go along. You sometimes have to put your sensitivities behind you and smile a lot.”
Nobody in this case is smiling. A judge will now decide whether the trustees stay, and, along the way, how much of a family’s private accounting becomes public record.
Featured image: Constance J. Milstein in her official portrait as U.S. ambassador to Malta (cropped). Photo by United States Department of State via Wikimedia Commons, public domain.
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