Epic trust litigation in estate of supplement company founder

On Behalf of | Feb 18, 2013 | Trust Administration |

Twin Cities readers may be familiar with the Herbalife company as much for its controversial multilevel marketing operations as for its broad claims of benefits in weight management and personal nutrition. However, to at least one attorney previously involved in trust litigation that has now spanned the course of nearly eight years, the company name may serve only as a reminder of what he once coined “the World War III of probate litigation.”

The epic trust dispute kicked off in 2005 when the ex-wife of company founder Mark Hughes and legal guardian of his son, Alexander Hughes, filed suit to remove the trustees of the Hughes Family Trust. The ex-wife accused the trustees of violating their fiduciary duties by paying themselves excessive legal and administration fees rather than managing the trust’s $400 million in assets for the benefit of the founder’s son.

The trustees, among them the young beneficiary’s grandfather, naturally insisted that they had performed admirably in the task of managing the estate’s sizable assets. They countered the allegations of fiduciary issues with assertions that the ex-wife had frustrated their efforts to meet with the boy and determine his wishes.

What began as a dispute centered primarily on a complicated tax-savings scheme that led to a loss in the wake of a $350 million claim against the estate ultimately devolved into personal warfare in which the ex-wife levied sexual harassment claims against one trustee and openly accused another of being complicit in the founder’s death.

When the founder’s son turned 18, he jumped into the fray as well. The ongoing litigation has become a slew of suits and countersuits with five different law firms headed to court to hash out claims involving more than $3 million in legal fees. In the morass of mixed claims, even the attorneys will need good attorneys to escape the fallout from this explosive probate dispute.

Source: The Recorder, “World War III of Probate Litigation Embroils a Multitude of Law Firms,” Scott Graham, Feb. 8, 2013