August 10, 2015

Hot Topics from the Attorneys for Family Held Enterprises Conference

Holland & Knight Shareholder Rights Blog
Michael J. Zdeb

On June 17, the Attorneys for Family Held Enterprises (AFHE) held a midyear conference in New York City. The agenda began with an interactive presentation titled "Understanding Conflicts of Interest and Current Events in the World of Fiduciary Litigation." The presentation focused on the types of conflicts and issues that can arise when trusts hold interests in a family controlled enterprise. Readily apparent from the presentation and questions was the intense interest of advisors to family enterprises. With the aging of the population of business founders and the increasing use of trusts to hold interests, the participants engaged the presenters with questions and issues ranging from:

  • Use of the trust to hold the interests and implications beyond typical tax planning with considerations of state trust law
  • Selection of trustees and trust advisors with business backgrounds
  • Fiduciary duty implications with directed trusts holding family business interests
  • The different views of what are fiduciary duties depending on relationships (agents, board members, officers, advisors, trustees, etc.)
  • Concerns with the multiplicity of potential roles of trustees: trustee; lender, manager of the enterprise, fellow family member or equity holder, etc.
  • Education of clients regarding potential issues beyond typical estate tax planning and duties of the professionals to advise them
  • Collaboration with attorneys with non-tax backgrounds regarding potential issues and fiduciary duties
  • How to evaluate the conduct of trustees that may have control over the enterprise in the context of traditional fiduciary duties as a trustee
  • Implications of legal developments regarding the intra-equity duties of participants, such as duties of those in control and oppression concepts
  • Importance of understanding the distinction between fair value and fair market value

The consensus of the conference attendees was that the planning and use of trusts require new areas of thought and professional development. In particular, collaboration of different fields of law, advisory and trust is needed to respond to the issues and areas of concern.

Several of the above topics will be the subject of subsequent posts on the Shareholder Rights Blog.

Note: AFHE is a non-profit association of attorneys and advisors that focuses on a collaborative approach to the representation of families and the enterprises they control.  Members include estate planning professionals, valuation experts, family counseling professionals, trustees and family office advisors.  While primarily an organization of attorneys, inclusion of non-attorneys is seen as central to the collaborative approach to the representation. The presentation summarized in this blog post was moderated by Roy Kozupsky, partner, Smith Gambrell & Russell, LLP, with panelists Susan Hartley, director of fiduciary services, Bank of New York Mellon and Michael J. Zdeb, partner, Holland & Knight LLP.

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