First Hawaiian Bank in a court filing has conditionally agreed to take over as trustee of the Kawananakoa Trust, saying it recognizes the importance to the Native Hawaiian community.
But the bank is insisting on the appointment of an independent guardian to attend to Abigail Kawananakoa’s personal needs as well as an independent conservator to oversee her financial affairs outside the trust, including her horse operations, which are losing $4 million a year.
The lawyers representing the 93-year-old Campbell Estate heiress and her wife, Veronica Gail Worth, have opposed these proposals in the past and are expected to object again.
A hearing on the appointment is scheduled for Aug. 15 in the courtroom of 1st Circuit Court Judge R. Mark Browning, the latest development in the ongoing battle over Kawananakoa’s $215 million estate, nearly half of which is earmarked for a foundation that will underwrite Native Hawaiian charitable causes following her death.
It was Browning who appointed First Hawaiian Bank as successor trustee, conditioned on its acceptance, after ruling in September that Kawananakoa was incapable of changing or revoking her trust or firing and replacing its trustee because of the stroke she suffered in June 2017.
Kawananakoa’s trust already had listed First Hawaiian Bank as backup trustee if and when former attorney James Wright is unavailable to serve as successor trustee.
In its filing, the bank said it evaluated the issues surrounding the trust and found them “highly complex and controversial,” offering “challenging elements including uncertain tax and financial circumstances, intense notoriety and media coverage, and significant liability risks and exposure.”
Despite the challenges, the bank said it would accept the position in recognition of how important it is to the Native Hawaiian community and given “Kawananakoa’s lineage and historically benevolent role in the community.”
Also in recognition of the Hawaiian community, the bank said it would cap its annual fees at $1.5 million and waive a settlement fee estimated in excess of $2 million.
Camille Kalama, a Native Hawaiian Legal Corp. attorney representing the Abigail KK Kawananakoa Foundation, said the nonprofit strongly supports the bank’s petition, saying it is consistent with the law and the intentions of the trust Kawana-nakoa created in the first place.
The foundation especially endorses the appointment of an independent guardian and conservator to protect Kawananakoa and work in her best interests, she said.
In a court filing in support of the bank’s position, Wright, who continues as the trust’s successor trustee, welcomed the bank’s involvement.
“After nearly two years of tumultuous and harmful litigation, this Court is now poised to bring peaceful closure to a sad story, in a manner wholly consistent with this Court’s prior orders, in the best interests of Ms. Kawananakoa, and in honor of her explicit written instructions and stated desires expressed prior to her stroke and at a time when she undoubtedly possessed the mental capacity to make such decisions,” the filing said.
Among Kawananakoa’s nontrust assets are her ranching and quarter horse operations, including a 15-acre horse ranch in Nuevo, Calif., and a smaller one in Washington state. The Nuevo ranch, called Lakeview Quarter Horse Farm, is in rural Riverside County and has 22 employees.
A longtime breeder and owner of quarter horses, Kawananakoa is the industry’s all-time leading female breeder and has produced racing earners of more than $10 million, according to the American Quarter Horse Association, which last year named her to its hall of fame.
But attorneys in the case have acknowledged that her horse operations are losing $4 million a year.
In its filing, First Hawaiian Bank said it wants a newly appointed conservator to evaluate the equestrian operations and file a plan for liquidation of assets.
It also wants the conservator to prepare and file amended federal and state tax returns, taking care of apparent gift tax liabilities, among other things.
