In a case that could break new legal ground, the sons and estate of late Charlotte real estate developer Henry Faison are suing his company over nearly $200 million in assets he was trying to redirect at the time of his death.
The assets are in dispute because Faison tried to update his will so that a large portion of his wealth would go to a charitable foundation named after his dog, rather than to his company. Despite a paper trail of emails and memos outlining that intention, he didnt sign the legal documents making it official before his sudden death Nov. 30 at 78.
Its a highly unusual case, said Tom Myrick, one of the lawyers representing Jay and Lane Faison and their fathers estate.
Legal experts say lawsuits involving unsigned wills arent common in North Carolina. The law generally says a written will isnt valid unless it is either handwritten by the decedent or is signed by that person in the presence of two competent witnesses.
But the lawsuit says that since Faison and company officials agreed to the change of plan before his death, and because the company received life insurance and other benefits under that agreement, the courts should force the firm to uphold its side of the bargain.
Some say the lawsuit is exploring largely uncharted territory when it comes to wills and estates in North Carolina.
It looks like it would do an end run around the statutory requirements for North Carolina wills, said Maria Lynch, a Raleigh attorney and board-certified specialist in estate planning and probate law. If it succeeds, I would certainly say it would break some new ground in North Carolina.
In his June 2000 will, Faison left the residuary of his estate what remains after taxes, specific gifts and other costs to his company, Faison Enterprises Inc. But he changed his mind, and in summer 2012 decided to leave much of his personal wealth including more than $100 million in loans that the suit says the company owed him to a charitable trust he planned to name after his dog, a Brittany named Skeebo.
The move would avoid about $110 million in federal estate taxes and allow the foundation to support conservative causes, according to the lawsuit.
But the suit says Faison died just before he could sign the will or the documents creating the trust.
Now Jay and Lane Faison, co-executors of the estate, are asking the courts to finish creating the foundation and force the firm their father founded in 1988 to hand over the assets.
They declined through Myrick to comment on the lawsuit. But a statement Myrick emailed to the Observer said, Mr. Faisons trust was intended to hold the majority of his wealth for the benefit of charity. This case was brought to ensure Faisons charitable intentions are carried out.
The company, now run by a board that Henry Faison appointed, is suggesting that it isnt sure it should surrender the assets.
Everyone agrees that Mr. Faison was working on revising his will before he died unexpectedly last year, the company said in a written statement issued through its lawyer, Douglas Ey. But he didnt finish the process, and the will that he signed in 2000 is his estate plan.
It is clear that the courts direction will be needed to sort out the legal implications of Mr. Faisons incomplete estate planning.
A plan left unfinished
Faison was one of Charlottes most prolific real estate developers.
His firm built Eastland and Northlake malls, handled the $100 million expansion of SouthPark mall, and built One Independence Center uptown. It handled dozens of other shopping centers, apartment complexes and office and industrial parks as well.
When Faison died, the lawsuit says, a substantial portion of his personal wealth, estimated at nearly $200 million, was invested in his company via loans he issued from his personal assets to help finance company projects.
The firm owed him some $105 million via promissory notes, the lawsuit says.
The lawsuit, filed Aug. 30, says that in summer 2012, an accountant with the firm suggested Faison update his tax and estate planning so the bulk of his estate could go to charity and avoid substantial estate taxes.
In July 2012, Faison sent a memo to two members of the companys board saying he intended to change his estate plan accordingly. Another memo he wrote that month to an executive compensation consultant retained by the company said that the grand majority of (his) estate, including the $105 million in promissory notes from Faison Enterprises Inc., will not be subject to federal estate taxation as long as the estate is bequeathed to qualified charitable organizations or to an exempt private foundation as currently planned.
Faison and his advisers drew up a mission statement for the Skeebo trust that reflected his fiscally conservative views of free enterprise, the lawsuit says. Faison directed that he and his sons would be trustees, along with retired Federal Reserve Bank of Richmond President Al Broaddus, former Crescent Resources CEO Art Fields, and Tom Hollowell, co-founder of the Bowles Hollowell Conner & Co. investment bank. Broaddus, Hollowell and Fields are part of the companys board of directors, according to the suit.
The suit says that by that fall, work was well underway on Faisons plan to redirect his assets to the trust. On Oct. 15, it says, Faison met with his advisers to finalize his estate plans, and one document they handed out showed $183 million going to Skeebo and nothing going to the company.
Faison called his lawyers at Robinson Bradshaw & Hinson on Nov. 26 to see when the documents would be ready for him to sign. But four days later, he died.
The lawsuit says the $105 million in promissory notes Faison had extended to his company were scheduled to mature in 2015, presenting a major obstacle to the firms ability to grow its business.
Faison restructured the notes to extend their maturity to 2052 so the company would have a fortress balance sheet and financial health long after his death in exchange for the notes going to charity as part of his residuary estate, the lawsuit says.
Lawyers for Faisons sons say in the suit that it was clear the developer made other provisions for the health of the company. They said Faison had confirmed that life insurance policies owned by the firm would provide it $60 million.
The lawsuit says if the company takes full title to the remains of the estate, it would be unjustly enriched while denying charities the money Faison intended to give them.
The suit also says the company, through the actions and decisions of Henry as its sole member and chairman of its board of directors, agreed to the restructured notes, and agreed to Henrys replacement of (the firm) with Skeebo as beneficiary of his estate.
The company has yet to file a full response to the lawsuit, but lawyers for Faisons sons and estate say in legal papers that the company is balking at handing over the assets.
FEI has stated that it will not convey any of the property it is entitled to under Henrys estate to Skeebo even though FEI received the benefit of the restructured notes, the suit says. Staff Researcher Maria David contributed.
Frazier: 704-358-5145; @Ericfraz on Twitter
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