News of the day from Australia is that Billionaire Gina Rinehart, the wealthiest woman down under, is having a roe with her children. Allegations and courtroom banter stem from Rinehart having her children delay the vesting date of the family trust. She claims taxes and penalties would have bankrupt the trust had it vested on its original schedule. Rinehart herself has been and continues to be the head of the trust.
According to court documents, Rinehart said her children are too spoiled, do not work, do not trust each other and are “manifestly unsuitable” to manage the family’s multi-billion dollar trust because they lack “requisite capacity or skill, [and] the knowledge, experience, judgment or responsible work ethic.” This is is support of her argument to remain the head of the trust, keeping things at status quo.
The three eldest of her four children have made allegations that their mother’s deceitful nature and “gross dishonesty” make her unfit to remain the head of the family trust. She used the threat of bankruptcy to force their signatures on documents ceding her life-long tenure over the trust, they argue.
The whole matter has been kept quite confidential as Rinehart did not want the matter being in the press. The court however refused her efforts to keep the matter confidential. She claims this was for the safety of all parties involved.
A Secret Pact
In 2006, Rinehart made a secret pact with her four children. They agreed not to say or communicate anything that could embarrass their mother or lower her reputation in the public’s eyes, in return for a share of dividends from the family company’s flagship Hope Downs project.
Rinehart’s attorneys now claim this pact has been violated given the children’s comments in what were suppressed hearings. Unsurprisingly, the three eldest children and their attorneys say this is not so.
In all of this however, Rinehart has not been alone. Her youngest daughter, 25, is standing by her mother, and has stated her siblings were “not fit and proper persons to be trustees.”
In all of this, I cannot help consider the argument of both sides.
From my Chair
Rinehart argues her children are too spoiled, do not work, do not trust each other and are “manifestly unsuitable” to manage the family’s multi-billion dollar trust because they lack “requisite capacity or skill, the knowledge, experience, judgment or responsible work ethic.” Apart from being a bit harsh, I would argue as their mother, it was her job to instill those values and skills, and ensure opportunities to gain experience.
If the children were spoiled with designer clothes, expensive watches, extensive traveling abroad, and so forth, should the results of such be on their heads or the one who was purchasing, spending, and spoiling? It is not in a child’s nature (or even an adult perhaps) to refuse spoiling. It is a parent’s job to apply the brakes.
On the other hand, it is hard to feel a lot of sympathy for her children. I imagine children crying over not having control over the knife that will slice them their piece of pie, pie they will receive despite having done nothing to earn it.
Additionally, they signed documents allowing the current situation to be as it is. As an attorney, I am positive they could have found several attorneys to review what they were being told by their mother, and ensure the documents were to their understanding. Even with the short notice, they could have gone that route, they didn’t.
So what is a parent to do? It is not uncommon for wealthy parents to leave some sort of legacy for their children while also leaving the majority of a fortune to charity, or some outside organization. In the majority of these cases, there is some sort of estate plan established to ensure the will and intent of those leaving the legacy.
Another option is to give funds on a springing executory interest. Plainly put, granting the legacy would be contingent upon just about whatever the document dictates. Obtaining a college degree, and maintaining a career certainly would acceptable terms, and in this case, would have made all the difference.