written by Adam G. Breeding, of Lake norman Law Firm
A recently filed Mecklenburg County lawsuit sheds light on the importance of finalizing one’s estate plan and testamentary wishes before it’s too late. Charlotte real estate developer, the late Henry Faison, unexpectedly passed away just days before he was scheduled to make changes to his estate plan that would give “virtually all of his money” to a charitable trust. The result of Mr. Faison’s unfortunate passing has manifested in a lawsuit filed by Faison’s sons in their capacity as executors of their father’s estate against the developer’s namesake company – Faison Enterprises, Inc.
Mr. Faison apparently had a pour-over will and revocable trust in place that provided for his heirs, but left the majority of his estate to Faison Enterprises, including some $100 million in loans held. However, months before his passing, he had made detailed arrangements to restructure his loans to the company and create a charitable trust that would fund “conservative causes that promote efforts to improve the principles of free enterprise, limited government, individual freedom, traditional American values and a strong national defense.” Nationally recognized Heritage Foundation (https://www.heritage.org/), and local non-profit, The Institute for Public Trust (https://institutepublictrust.org/), to which the author of this article was an inaugural graduate, are listed in exhibits to the suit as potential recipients of the donations. In fact, just four days prior to his passing Mr. Faison contacted his estate planning attorneys “eager to [document the trust].” But, it was not to be, and by the terms of his existing estate planning documents – Faison Enterprises was bestowed nearly $200 million of Faison’s net worth.
It seems apparent that the parties to the lawsuit and their respective legal counsel are in agreement that Mr. Faison’s admirable intentions were to gift his money to charity. However, North Carolina law requires that certain formalities are met to legally make such testamentary gifts. Inasmuch, the company is the rightful ‘heir’ to the disputed funds – at least from a pure legal perspective – and would therefore likely owe an obligation to its shareholders to protect the assets. Of course, the estate’s attorneys have made thoughtful and creative arguments including ‘unjust enrichment,” in hopes of creating new law to respect circumstances in which the testator’s wishes were clear despite the absent formal execution requirements. Docketing such a suit also puts the company in a position to explore settlement options that could avoid prolonged litigation and still honor its obligations to stakeholders.
Ultimately, this situation is an unfortunate example of estate planning too late. All reports indicate that Mr. Faison passed unexpectedly, but he was also 78 years old. It cannot be denied that he had made his intentions known and that he was actively working on making the desired corrections to his plan – but I think the very astute and savvy man would acknowledge that he started too late. Mr. Faison’s sons are doing a good thing by challenging the law and seeking to honor their father’s wishes, but it’s a true shame for the family, the charities involved, the company, and others affected by Mr. Faison’s passing that his desires weren’t documented earlier. The only beneficiaries of this ill-fated situation, albeit unintended, are the trial lawyers, and ironically, the very government that Faison hoped to ‘limit’ with his charitable contributions, as the state and federal government will be due substantial estate taxes if the lawsuit fails.
I bet Mr. Faison would be happy to share his story as one to encourage folks to develop and / or alter their estate plans sooner rather than later. Hopefully, his intentions will be carried out, but in any event we can all learn from Mr. Faison – even after his passing – as his legacy now reminds us to stand up for the causes we believe in and to do it before it’s too late.