The death of a parent is never easy. When significant assets are involved, siblings may have disagreements over how the family legacy should be handled. Even when a parent has created an elaborate plan to pass the family company and other assets on to the children, heated disputes may erupt into litigation. Our Toledo area readers may have missed a story from another Great Lakes state that highlights how a detailed estate plan may not always protect against sibling rivalry.
The patriarch of the family took great care to create a will and various trusts to provide for his children, as well as the wife of one of his sons who had passed away. He also created a charitable foundation in honor of his late wife. His estate documents provided the charity with a $4.5 million gift.
Equal Ownership Interests, But Not Equal Decision-Making Authority
The man had started a business in 1978 that appears to be the main source of contention is the legal battle. The five siblings and their sister-in-law were each given equal ownership interests in the multi-million dollar entity, through trust documents related to the business. However, one sister was named trustee and given exclusive control of the 100 shares of voting stock.
Some of the siblings argued that the structure of the trust shows that their father’s intent was to have assets sold to provide for all of the heirs. The sister who was given control argued that the elaborate estate plan shows that her father wanted the company and other assets to be kept in the family.
The woman with the controlling interest in the business reportedly stated that she had no intention of selling any of the assets under her exclusive control, and the business would pay no dividends, according to the lawsuit. Her four siblings and sister-in-law who were given ownership interests without any control over the company began to feel that they were essentially cut off from their inheritance rights.
Well-Constructed Plans Are Not Immune From Disputes
Trusts and other estate planning documents related to family businesses, as well as vacation homes and other family assets, often include provisions that are intended to avoid disputes and sibling rivalry. If one sibling wants to sell an asset, the trust documents, for instance, may outline how disputes should be handled.
Here, one person was given the sole authority to make decisions. Her siblings believed that meant that she had a fiduciary duty to ensure that they received their inheritance as their father intended, which included the duty to sell assets, if necessary. She believed that the overall structure showed his sole intent on keeping the business running — and to keep it in the family.
In the end, the court did not decide the issues as the parties agreed to sell the business to settle the probate and trust litigation.