HB - The Legal Corner Magazine #Issue 7

Our clients continued to operate and manage the business, sharing the income and profits equally between themselves and their sister. However, more than a decade later, their sister asserted minority shareholder rights alleging that she had been improperly excluded from management of the company, that our clients had preferred their own interests above hers and the company which lead to a lengthy and bitter legal battle. A long running and unpleasant dispute involving several sets of proceedings in the High Court followed. The case was eventually settled at mediation with an agreement to divide various assets between the siblings. This dispute permanently damaged the familial relationship between the siblings. Avoiding the Dispute: A number of opportunities that could have prevented this dispute, were missed. Firstly, a dispute might have been avoided if the original will recognised the differing interests and needs of the siblings and reflected these differences. After the father passed away, a deed of variation could have been entered into by the siblings to adjust the distribution of assets within the estate (as the mediation eventually did). Lastly, formal agreements regarding management responsibilities and governance of the company could have been established to avoid future

BY SARJU KOTECHA Solicitor and Legal Director Dispute Resolution, International

Probate disputes arise from a variety of factors, ranging from inadequate estate planning to familial conflicts and misunderstandings. These disputes can cause significant emotional strain and financial burden on all parties involved. In this article, we will discuss several real-life probate cases, analysing the circumstances that led to the dis- putes and discussing strategies that could potentially have prevented them.

Example 1: Lack of Succession Planning in a Family Business

We acted for two brothers in a dispute with their sister arising after the death of their fa- ther. At the centre of the dispute was a family business, started by their father, and which, by the time of his death was valued in the tens of millions of pounds. The business operated via a limited company of which the father was the sole shareholder during his lifetime. Our clients joined their father in the business at a young age and became responsible for management in their father’s later years. As employees, they had no shares in the company. Further, they were not appointed as directors. Their sister moved abroad after marriage and had no involvement in the business. In his will, the father left everything equally to all the three siblings.

conflicts. Planning for succession among the next generation may have also pre-emptively addressed potential disputes.



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