No opposition heard to plan for initial $35 million distribution
By Ian Lind | August 31, 2010
Following an August 19, 2010 hearing in Probate Court in Honolulu, the first planned distribution to beneficiaries from the George Galbraith Trust Estate appears to be on track.
Minutes of the August 19 hearing follow.
In brief, no opposition was to the proposals for handling outstanding issues or to the trustee’s plan to make the first $35 million distribution.
It appears that when the order is signed by the judge, the initial distribution will follow.
The trustee will retain $15 million and the unsold real property. A final distribution will be made, as I understand the situation, when the real property is sold.
In the case of beneficiaries who cannot be identified or located, or estates that are unsettled, the associated distributions would be transferred to the State of Hawaii’s unclaimed property fund, where it could be claimed at a later date with property documentation.
Case Title: IN THE MATTER OF THE TST EST OF GEORGE GALBRAITH
Div.: 1C23 CV DATE: 08-19-2010
Time: 1000A
Judge I.D.: JD CHAN
Minutes:
DVD: 1C23/08192010
CLK: M. CASTILLOPRESENT: RAYMOND OKADA, ESQ. FOR BANK OF HAWAII;
LENORE LEE, ESQ. FOR JULIE FINLEY AND
JONATHAN GURDIN; ROBERT BRUCE GRAHAM, PRO SE;
MEYER UEOKA FOR FRANCIS AKINA, JR., LORETTA DUNN,
ARLENE GALLIHER, AND ESTATE OF ADELE IWAMASU;
KALANI BUSH FOR MOANA EISELE; MICHAEL LUM, MASTER;
AND ANTHONY LOCRICCHIO, ESQ.10:11AM: CASE CALLED; APPEARANCES ENTERED.
REPRESENTATIONS AND ARGUMENTS MADE BY COUNSEL.
FOLLOWING REPRESENTATIONS AND ARGUMENTS, THE
COURT GRANTED THE PETITION; AND THE COURT WILL
DOCK MASTER’S REPORT.MR. OKADA TO PREPARE THE ORDER.
MS. LEE’S REQUEST FOR THE TRUSTEE TO GIVE
NOTICES TO BENEFICIARIES RE: SALE OF PROPERTY
IS SO NOTED.MR. OKADA NOTED WILL DO NOTICES.
THE COURT FURTHER NOTED THAT WILL TAKE
MR. LOCRICCHIO’S REQUESTS UNDER ADVISEMENT.
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NEWS: Court approves method for dividing Galbraith Trust assets
By Ian Lind | January 7, 2010
Probate Judge Colleen Hirai has issued a court order instructing Bank of Hawaii to distribute the assets of the George Galbraith Trust Estate by dividing the total amount equally among the thirteen remaining annuity groups, and then dividing each of the 1/13th shares in proportion to the annuity segment owned by each beneficiary.
Judge Hirai appears to have accepted the legal analysis put forward by attorney Bruce Graham rather than the recommendation of the court-appointed master, Michael Lum.
The judge’s order was made public in a “minute order” quietly posted on the court web site on December 28, 2009, and was to be mailed to attorneys appearing in the case.
It was one of Hirai’s last official acts before retiring at the end of 2009. Her surprise retirement announcement was made just days after the December 3 Galbraith hearing.
The timetable for distribution remains unclear. A further court hearing will be required to consider technical details of the distribution plan, such as how unclaimed annuity segments will be handled.
The minutes of the December 3 court hearing, followed by Hirai’s minute order of December 28, are printed below in full.
Case Title: IN THE MATTER OF THE TST EST OF GEORGE GALBRAITH
1EQ00-0-002176Div.: 1C20 CV DATE: 12-03-2009
Time: 1000A
Priority: 23
Judge I.D.: J C HIRAI
Video No.:
Audio No.:
Minutes:
DVD: #120120309 CLERK: K K UMAMOTO
10:47 A.M.-11:41 A.M. CASE CALLED.PRESENT: RAYMOND OKADA AND CONRAD WEISER FOR
PETITIONER BANK OF HAWAII; LENORE LEE FOR JULIE
FINLEY AND JONATHAN GURDIN; JULIE FINLEY; ROBERT
BRUCE GRAHAM, JR., PRO SE; DAVID DICKINSON, PRO
SE; DOUGLAS SMITH FOR SHEILAGH MORIN; MEYER UEOKA
FOR FRANCIS AKINA, JR., LORETTA DUNN, ARLENE
GALLIGHER, AND ESTATE OF ADELE IWAMASU; S. KALANI
BUSH FOR MOANA EISELE, PERSONAL REPRESENTATIVE OF
THE ESTATE OF JOHN ADRIAN MCPHERSON; CARROLL
TAYLOR FOR FRANCES MCCALLUM AND NEILL SCHOENING,
SR.; AND MICHAEL LUM, MASTER.
DISCLOSURE BY THE COURT STATED ON THE RECORD.
HAVING HEARD THE ARGUMENTS PRESENTED BY THE
PARTIES, THE COURT TOOK THE MATTER UNDER
ADVISEMENT AND WILL ISSUE ITS RULING.
CERTAIN DOCUMENTS MAY BE FILED BY 12/10/09.
*******
12/28/09: MINUTE ORDER.THE COURT HAVING REVIEWED THE PETITION, OTHER
DOCUMENTS THAT WERE FILED, AND THE MASTER’S
POSITION ON GEORGE GALBRAITH’S INTENT WITH RESPECT
TO DISTRIBUTION UPON TERMINATION, AND HAVING
CAREFULLY CONSIDERED THE ARGUMENTS PRESENTED,
GRANTS THE REMAINDER OF THE PETITION IN PART AND
CONTINUES IT IN PART UNTIL MOVED ON.THE PETITION IS GRANTED IN PART AND THE COURT
INSTRUCTS THE PETITIONER AS FOLLOWS:IN THE CONTEXT OF THE TESTATOR’S WILL AND
CODICIL, THE WORD “EQUALLY” IN THE TERMINATION
PROVISION OF THE WILL SHOULD BE INTERPRETED TO
MEAN THAT ONE-THIRTEENTH OF THE TRUST ASSETS
SHOULD BE ALLOCATED TO EACH OF THE THIRTEEN
ANNUITIES WHICH STILL EXIST AND THAT THE ASSETS
INCLUDED IN EACH ONE-THIRTEENTH SHARE SHOULD BE
DIVIDED AMONG THE VESTED REMAINDERMEN OWNING
INTERESTS IN EACH PARTICULAR ANNUITY, ON THE BASIS
THAT EACH OWNER OF THAT ANNUITY WILL RECEIVE AN
AMOUNT PROPORTIONATE IN SIZE TO THE SIZE OF THE
ANNUITY SEGMENT OWNED BY THAT PERSON.THE PETITION IS CONTINUED IN PART UNTIL MOVED
ON AS TO ALL REMAINING ISSUES IN THE PETITION
INCLUDING BUT NOT LIMITED TO THE DISPOSITION OF
ASSETS TO TRUST BENEFICIARIES WHO ARE VESTED
REMAINDERMEN WHO CANNOT BE LOCATED AFTER
REASONABLE SEARCH AND INQUIRY AND THE TRUSTEE FEES
REQUESTED BY PETITIONER.THE MASTER IS TO FILE A REPORT ADDRESSING ALL
OF THE REMAINING ISSUES RAISED BY PETITIONER IN
THE PETITION. AFTER THE MASTER’S REPORT IS FILED,
PETITIONER IS TO FILE AN AMENDED ORDER SETTING
DATE, TIME, AND PLACE OF HEARING TO PLACE THE
PETITION BACK ON THE CALENDAR FOR A DETERMINATION
OF THE REMAINING ISSUES.MR. OKADA IS TO PREPARE THE ORDER.
A FILED COPY OF THE MINUTE ORDER WILL BE
MAILED TO RAYMOND OKADA AND CONRAD WEISER, LENORE
LEE, DOUGLAS SMITH, MEYER UEOKA, S. KALANI BUSH,
CARROLL TAYLOR, ROBERT BRUCE GRAHAM, JR., DAVID
DICKINSON, AND MICHAEL LUM.
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Make contact via Skype
By Ian Lind | January 6, 2010
For Galbraith beneficiaries all over the world, communication is a real problem.
Skype offers a way to communicate for free over long distance using the voice over IP protocols. And it’s free.
If you have internet access, you can download a copy of the Skype software for free from Skype.com.
Feel free to contact me here in Hawaii. I’ll give you any information that I can.
My Skype address is ian96730.
Aloha!
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Probate Judge to rule on how Galbraith Trust will be distributed to beneficiaries
By Ian Lind | December 9, 2009
A hearing before Probate Judge Colleen Hirai on Thursday, December 3, 2009 resulted in scoldings for the court-appointed master and the trustee, as well as a signal that a legal decision on the methodology for final distribution of assets is forthcoming.
Judge Hirai, in her very quiet style, made it clear that the report and recommendation by the appointed master, Michael J. Lum, fell short because it failed to provide a legal basis for his recommendation for how the trust assets should be distributed.
She chided Raymond Okada, attorney for trustee Bank of Hawaii, saying that she had expected all remaining matters to have been dealt with in motions filed in advance of this hearing.
Instead, a number of matters relating to the designation of beneficiaries were left unaddressed, including what will be done in cases where beneficiaries can’t be found or cases where estates of deceased beneficiaries have not yet been resolved.
Lum, as master, said he had not found any applicable prior legal decisions to guide his recommendation on the issue of distribution.
“I couldn’t find anything giving a definitive answer,” Lum told the court.
Instead, Lum based his recommendation on a series of speculative conclusions about George Galbraith’s likely “intent” based on numerous factors. In the end, without reference to legal precedent, he recommended that the assets be distributed in the same proportion as the annual distributions to beneficiaries.
But attorney Bruce Graham, himself a beneficiary through an purchased years ago, disagreed, and filed a legal analysis citing numerous cases to support a different distribution recommendation.
Graham, considered one of Hawaii’s top trust attorneys, concluded the Galbraith assets should first be divided equally among the 13 remaining annuity groups, and then proportionally within each annuity group according to each beneficiary’s proportional share of the total annual payments to that annuity group.
Graham argued this is the only solution that both gives meaning to the use of the world “equally” in Galbraith’s will, while not rewarding those who split their shares into tiny fractions in hopes of benefiting disproportionally in the final distribution.
Graham attempted to differentiate the sale of shares, which has previously been determined to be legal, and the artificial creation of fractionalized shares by those seeking to benefit at the expense of other beneficiaries. He also defended his own purchase of an annuity share as valid, and neither recent nor “concocted by a law firm.”
A portion of the annuity share held by Graham were reportedly acquired from attorney Arthur Trask by a partnership of attorneys with the firm of Ashford & Wriston in the 1970s. Trask had earlier spent a year as a court appointed master who reviewed the trust and reported back to the court.
Some view this as an example of conflicts of interest that have arisen with the Galbraith Estate and the way certain insiders have used information for their own benefit.
Graham now hold parts of Annuity No. 4, joining a number of other attorneys and their relatives in spliting the total of $75 paid annually to this group of beneficiaries. Although Annuity No. 4 has only a 1 percent proportional share of the annual $7,500 distribution, it would receive 1/13 of the final distribution, or 7.69%, under the scheme he advocated.
Mr. Okada, representing Bank of Hawaii, declined to take a position on whether case law favors one distribution scheme over another.
However, Judge Hirai, faced with the task of making a legal decision in the case, is likely to give Graham’s detailed analysis considerable weight. Several other beneficiaries also threw their support behind Graham’s analysis.
Judge Hirai affirmed the April 27, 2007 as the effective date for identifying beneficiaries who will share in the final distribution. Those with an interest in the estate on that date will be part of the final distribution.
Hirai said she would allow a brief period for filing final documents, and then will issue the court’s decision on how the final distribution will be made.
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Court-appointed Master recommends distributing trust assets based on annual payments
By Ian Lind | September 28, 2009
The court-appointed Master has notified the probate court handling the termination of the George Galbraith Trust that the trust’s assets should be divided and distributed “equally in proportion to each annuitant’s share of the non-lapsed annuities….”
The Master’s position, filed with the court on September 11, 2009, represents a major step towards final termination and distribution of the assets.
If the Master’s recommendation is accepted by the court, a beneficiary could expect to receive approximately $6,666 for each $1 received annually from the estate if the trust’s assets at the time of the final distribution are valued at $50 million, with others receiving proportionately more or less depending on their annual payments.
The Master’s determination of Galbraith’s intent is a key because the requires the estate to be settled according to Galbraith’s intent unless that would be contrary to law.
But that “intent” isn’t immediately clear.
To make his determination, the Master, Michael J. Lum, had to interpret what Galbraith meant by this sentence in his will:
On final ending and distribution of the trust, the trust fund is to be divided equally amongst those persons entitled at that tme to the aforementioned annuitites.
Several answers to the meaning of the word “equally” in this context have been proposed.
One suggested approach would be to divide the trust equally between the 13 annuity groups and then proportionally within each group. The master expressed “difficulty” with this because it would have been easy for Galbraith to write his will to provide that, but instead “set forth an elaborate scheme of distribution favoring different people in varying amounts.”
A second main approach would interpret the term literally and simply divide the total assets by the total number of remaining individuals receiving annual annuities from the trust.
Again, the master rejected this idea, saying it would unfairly reward “those persons who have split their interests intentionally” to create additional beneficiaries. Lum expressed his belief that “Galbraith never intended to leave his estate other than to the heirs of those persons he named in his Will.”
The Master’s final position follows his review of what is known about Galbraith himself and the historical situation he was in, and reconciling the various facts with the possible outcomes.
If the Master’s recommendation is accepted by the probate court, each annuitant’s share would be calculated by first dividing the annual annuity amount by $7,500 (the total amount distributed to beneficiaries each year), then multiplying the trust’s final assets by the result.
For example, someone who receives $1 annually would first calculate 1/7500 or .0001333333.
If the trust is worth a total of $50 million, then the amount to be distributed to the hypothetical beneficiary in this example would be .0001333333 * 50000000 or $6,666.66.
In a separate mailing dated September 10, the trusteee, Bank of Hawaii, reported that the trust had approximately $50.2 million in cash, short-term fixed-income securities, and stocks as of August 31, 2009.
In addition, it also held the remaining 1,725 acres of land in central Oahu.
Although the Galbraith lands had once been thought to be worth as much as $100 million, this estimate has proved to be wildly exaggerated. It is possible that the remaining lands, which are zoned for agricultural use, could eventually be sold for as little as $20 million.
A court hearing before Judge Colleen K. Hirai has been scheduled for 10 a.m. on December 4, 2009 in Honolulu.
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How has the global financial crisis impacted the value of the Galbraith Estate? Unknown, for now.
By Ian Lind | July 17, 2009
There are no official data yet available to show how the value of the Galbraith Estate’s assets have been hit by the global financial crisis, but it has likely taken a significant toll.
The most recent financial report filed in Probate Court covered the six month period ending June 30, 2008, which was filed with the court back on July 23, 2008.
At that time, as shown in the summary table below, the estate was valued at $89,914,678.07.
Of the total, 26% was invested in common stocks, 26.5% in U.S. Treasury bills, and most of the remainder was made up of the estate’s Hawaii real estate.
Since that time, U.S. stock markets plunged by 50%, and are still some 40% below their all time highs reached in late 2007.
[source: Third Supplement to Petition for Instructions, for Review and Settlement of Final Accounts.]
Looking at the Galbraith assets, it is highly likely that the stock portfolio took a beating, depending on how quickly Bank of Hawaii reacted to the rapid deterioration of global markets.
Bank of Hawaii’s Pacific Capital stock funds report 1-year losses ranging from about 20% to over 36% from July 2008 through June 2009.
Real estate values reflected in the trustee’s investment summary may also be well above today’s values.
For example, the Trust for Public Lands recently estimated the fair market value of 1700+ acres of Galbraith land, the bulk of the remaining property, at $22 million to 25.2 million.
The property has been valued for tax purposes at more than $70 million.
However, at least two proposed sales at well below that amount have fallen through, apparently indicated that these values have been inflated.
And with substantial political pressure to restrict the Galbraith lands to agricultural use, it is unlikely that a sale based on the speculative value of possible future development will be possible.
Questions about the current value of the should be answered by the next annual accounting, which could be filed with the court soon. In 2008, the accounting for the period ending June 30 was filed within 30 days.
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