Proper estate planning is very important for California families, as even when a trust is set up while an individual is still alive, legal matters can still arise. The heirs to a California winery are learning this after winding up in court over matters related to trust administration of the family winery. The family has settled the legal dispute, but there may be emotional scars left on the family for some time.
The matter involves the Foppiano wine family from Healdsburg. The winery was family-founded and has been in operation since 1896. The 101-year-old father passed control of the winery to his son in 2005, and named both children as co-trustees in 2009.
The daughter in the family took her brother to court in an attempt to remove him as a co-trustee. She claimed he was neglecting his financial responsibility to the company by taking out loans for the business and using the trust her father had set up as collateral. The family trust is reportedly estimated to be worth tens of millions of dollars.
The brother denied her allegations, and stated his financial plans were to upgrade the family winery. The lawsuit revealed the winery had been struggling financially, and had assumed more than $4 million in debt. The son upgraded the tasting room as a means of bringing in more money to the winery, and claimed the father had done little to upgrade or invest in the business in decades.
As well, the son hired professional management and improved marketing efforts. These changes were financed through bank loans he had used the family trusts as collateral for. His sister was made head of the tasting room, but was "rebuffed" when she requested to see the books. When the man her brother appointed as President reportedly fired her in 2010, she sued her brother in a request that he be removed as co-trustee.
Under the terms of the settlement, both heirs will step down as co-trustees and the judge will appoint an independent third party with winery experience to manage trust administration. Both parties will have an opportunity to provide a name to the judge for trustee, or the judge can choose his own. This case may serve as an example to others that when family relationships are on the line, an independent third party as trustee for trust administration can be greatly beneficial.
Source: Press Democrat News, "Foppiano wine family settles dispute in mid-trial," Paul Payne, Dec. 22, 2011