Gina Rinehart isn’t the only billionaire locked in a legal battle with her children over a family trust.
On April 16, the Victorian Supreme Court will begin hearing a case that technically pits Solomon Lew against his children, with the fate of a $620 million family trust at stake.
I say technically because the battle isn’t really between Lew and his kids but rather a fight between Solomon Lew and two of his children’s former spouses – Adam Priester, the ex-husband of Solomon’s daughter Jacqueline Lew, and Sarah Nowoweiski, the estranged wife of Solomon’s son Stephen Lew.
The Supreme Court action was sparked by attempts by Nowoweiski and Priester to access a share of loan accounts held by the Lew children on behalf of their parents as a result of their marriage break-ups.
According to a Supreme Court judgement handed down in February (in which judge, Justice Tony Pagone, ruled that the case would be held in the Supreme Court rather than the Family Court), Solomon Lew says that back in 1999 he set up an arrangement with the agreement of his children that certain distributions would be made to them from the trust in question.
The distributions were, according to Lew, to be held by the children on behalf of Solomon and his wife Rose. The distributions were made because of a coming change in trust laws.
Nowoweiski and Priester now want access to a share of the distributions, but Solomon Lew wants the court to rule that the he and his wife are the sole beneficiaries of the trust – not his children and their former partners.
Lew’s children are not contesting the case, leaving Nowoweiski and Priester as the “true controverters” in the words of Justice Pagone.
The case will be closely watched and promises some fireworks.
Pagone said in his February judgement that it is likely Solomon Lew will be cross-examined about the establishment of the trust arrangements and said that “critical to that evidence will be the credibility of Mr Solomon Lew”.
“The evidence of Mr Solomon Lew’s taxation concerns, the advice he received, the development of the trust proposal and the nature of the steps taken to implement it are matters said to be probative of whether he in fact had the conversations that he alleges to have had with each of his three children,” Pagone said.
Trust matters remain among the most complex areas of the tax world. As experts such as Yasser Al-Ensary at the Institute of Chartered Accountants have consistently said, we’re well overdue for a review of our trust law framework.
Until that happens, the fact the billionaires such as Solomon Lew and Gina Rinehart can end up in such public fights should act as a warning to every entrepreneur that uses a trust – get as much advice as you possibly can…and then hope you don’t end up in court!