Can you stop your kin from fighting over your fortune? Maybe not, but early preparation can help, reports Hamish Fletcher

'Happy families are all alike; every unhappy family is unhappy in its own way," wrote the Russian master Leo Tolstoy.

But for the wealthy families of three deceased New Zealand businessmen, their woes all echo one another.

The details differ, but relatives and descendants of Michael Erceg, Tracy Gough and Hugh Green have all been involved in court battles involving the men's legacies.

Such battles are more the exception than the rule, but how do you arrange your affairs to avoid family warring in your wake?

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Wellington lawyer Greg Kelly, regarded as an authority on wills and estates, says there is no one-size-fits-all approach that will ensure harmony reigns when you die.

And although the vast majority of estates aren't contested, the more money that is at stake, the more incentive a family member has to try to get some of it.

Kelly says that because of an increase in the number of second marriages, a "classic fight" over an estate now involves the children from a first marriage and their parent's latest spouse.

"You've got children of a first marriage with competing claims against a second or third spouse or partner, and quite often that can get acrimonious," he says.

"Things like family trusts, putting business assets in different companies and having an up-to-date will are very important because if you don't do those things you can leave a real mess behind which can be very expensive to sort out and money can go to people who you may not have wanted to benefit."

The most common avenue used for disputing an estate is through the Family Protection Act, which allows a will to be challenged for not adequately providing for particular members of a family.

Despite what someone might have penned as their final wishes, the court can reconstitute a will if it believes the departed failed in their duty to provide for certain relatives.

But aggrieved kin can claim only from what is left in the estate at the time someone dies.

If property has been gifted before death, it cannot be the subject of this sort of dispute.

Chapman Tripp senior partner Arthur Young - stressing that he is speaking generally, not about the Erceg, Gough or Green cases - says a lot of planning is needed if sizeable business assets are due to come under another generation's control.

"It can take years to accomplish [the transition] smoothly and fully," he says.

"It's not just a matter of weeks or months, and so it is a thoughtful and careful process that needs to be planned for."

Young believes a discretionary family trust is the ideal mechanism to facilitate this sort of change - if it is set up properly.

He says someone setting up a trust needs to anticipate where control of the business should lie in the long term, and put all that in a letter of wishes.

"This generally isn't a legally binding document, it's generally informal ... in conjunction with a well structured trust, a letter of wishes can be a very useful thing to guide all those who are involved, including family members."

While there certainly could be scraps over trusts, people's affairs were often sorted out without dispute.

Although it isn't a legal remedy to keep relatives at bay, another senior lawyer says consulting your family and communicating your wishes to them before you die can help to forestall any problems.

If they know your wishes ahead of time, there is a better chance that they will stay on side when the time comes to divide up an estate.

Case #1:

The Ercegs

Liquor magnate Michael Erceg was believed to be one of New Zealand's richest men when he died in a helicopter crash almost a decade ago.

Erceg, who was 50 at the time of his death, was the founder of Independent Liquor and was estimated to be worth $620 million.

He was piloting his private helicopter to Queenstown with a friend when the craft disappeared off the radar near Raglan in November 2005.

The wreckage was found about two weeks later in dense bush, and both men are believed to have died on impact.

Independent Liquor, which makes Vodka Cruiser and other ready-to-drink beverages, was put up for sale after Erceg's death and bought by private equity interests, his widow Lynette Erceg, and others.

It was then sold in 2011 for $1.5 billion to Japan's Asahi Group Holdings, which now runs the business.


The family of businessman Michael Erceg, who was killed in a helicopter accident, at his funeral held at the Auckland Cathedral of the Holy Trinity in 2005. From left: his sister Vinka, mother Millie Erceg, and wife Lynne Erceg. Photo / Brett Phibbs

The following year, Michael Erceg's mother, Millie, brought an action in the High Court at Auckland against her daughter-in-law and Darryl Gregory as trustees of the Erceg Family Trust.

The proceeding related to the Erceg estate but the details remain secret and were subject to suppression orders during a hearing last year.

Justice Raynor Asher last month declined a media request to view the court file and said the parties seeking to litigate private disputes had a "legitimate privacy interest".

"Such cases often settle and assertions are made that are later regretted and changed ... there is the chance that publication will widen an unfortunate family rift making settlement more difficult," the judge said.


Judge Raynor Asher. Photo /Steven McNicholl

Millie Erceg, now in her 80s, also brought civil proceedings against Lynette Erceg and Gregory as trustees of the Acorn Foundation Trust.

This trust sold its shares in Independent Liquor for a "substantial sum", according to a ruling in January from Justice Geoffrey Venning.

In this litigation, Millie Erceg was seeking copies of financial documents for this trust, agreements for sale of the trust's shares in Independent Liquor, valuations and minutes of trustee meetings.

Offers had been made for her to view the documents on specified terms, but Millie Erceg's lawyer argued that without access to them she could not require the defendants to account for their actions as trustees.

The defendants' lawyer, in his arguments, referred to a confidentiality clause in the trust deed. "The trustees are concerned that disclosure of the identity of the other beneficiaries under the trust and the benefits received by individual beneficiaries from the trust will create further disharmony between family members where there is already an unfortunate history of tension and conflict between them," Justice Venning said in his decision, which also revealed that Millie's son Ivan Erceg was acting as a family adviser.

The judge ordered that Millie Erceg was to have some access to certain documents, subject to redactions and confidentiality conditions.

Case #2:

The Goughs

Disputes about Tracy T. Gough's estate started within his family soon after the Christchurch businessman died in 1955.

Those quarrels continue to the present day, a High Court judge said in June.

The Gough family is well known in the Canterbury region and is estimated to be worth $350 million. Tracy T. Gough was one of three men who in 1929 set up Gough Gough and Hamer (GGH), which has held a dealership for Caterpillar heavy equipment since the early 1930s.

Today, that includes machinery such as excavators, rollers and compactors.

At the time of his death, Gough owned the vast majority of shares in GGH and had three children from two marriages.

Under his last will, he established several trusts, the main assets of which were the shares in GGH.

The beneficiaries in the estate were Gough's children - all now deceased - and his grandchildren.

These included the children of Blair Gough - the B.T. Gough parties - and the children of Owen Gough - the O.T. Gough parties. Ben Gough and his sister Gina Satterthwaite are on the B.T. Gough side; brothers Anthony, Harcourt and Tracy Gough are on the other.

A new structure was set up in the 1980s, under which the O.T. Gough parties and the B.T. Gough parties were represented by sub-trusts, with each appointing a trustee to a head trust.

The head trustees, in turn, have the power to appoint directors, who are required to retire after three years unless they are also full-time employees of the Gough Holdings company.

But there is a possibility the head trust may now be wound up.

Because of this, a possible issue was flagged involving Ben Gough, who was appointed as a director by the head trustees and is also a full-time company employee.

The then-trustee of the O.T. Gough Family Trust went to the High Court at Wellington last year to determine how part of the company's constitution should be interpreted if the head trust was wound up.

It wanted to know, if the head trust was wound up, would a family member who was a full-time employee and appointed as a director by the head trustees be prohibited from staying on the board unless all shareholders unanimously agree that they should continue?

Lawyers for the O.T. Gough branch of the family argued the answer to this should be yes; representatives of the B.T. Gough side disagreed.

In a decision delivered in June, Justice Alan MacKenzie said that if the head trust no longer existed the company's constitution would prohibit a family director appointed by the head trust staying in office without the unanimous approval of shareholders. This decision has since been appealed by the B.T. Gough branch, and will probably be argued next year. Gough Holdings tried to get this decision suppressed on the grounds that "any publicity associated with the proceeding is likely to cause significant damage to the business".

The essence of its concern was that the company's Caterpillar dealership might be put at greater risk by publicity about the proceeding.

But Justice MacKenzie dismissed this application in June.

Case #3:

The Greens

Philanthropist Hugh Green lined up alongside workers in the 1950s, labouring day and night to complete his company's first contract.

When he died in 2012, aged 80, he left behind an estate worth $350 million. He had been awarded a Queen's Service Medal for services to philanthropy six months before he passed away.


Businessman and philanthropist Hugh Green (left), from the Hugh Green Group, sits next to his son John Green in this 2011 photo. Photo / NZ Herald

The empire he built over decades included the Hugh Green Group, a family-owned property company, and the Hugh Green Foundation, a charitable organisation that supports causes such as medical research or individuals living with disabilities or serious illness.

The philanthropist's eldest daughter, Maryanne, had been chief executive of the family business, the Hugh Green Group, and headed the Hugh Green Foundation, which was set up to give away about $3 million a year.

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But Companies Office records show she left the business and the trust in the 12 months before her father died.

A copy of Hugh Green's will - signed months before he died - shows he left his fortune to the Hugh Green Trust, trustees of which include two of his five children, John and Frances Green, and two lawyers.

The year after her father's death, Maryanne Green brought action in the High Court at Auckland challenging the validity of the new will.

The proceedings, partly heard in August before Chief High Court Judge Helen Winkelmann, alleged the patriarch was subject to undue influence from two of his children and a lawyer working with them, according to a court ruling about evidence in the case. Closing arguments are to be heard next month and a decision is not expected until after Christmas.