Another Estate Planning Failure

A major Washington, D.C.-area business made the headlines in an unflattering way on Saturday. A lawsuit was filed over the estate plan of the owner of major auto dealerships and related businesses. According to the allegations, the daughter from the owner’s first marriage was promised a one-third interest in the business. Instead, two sons from the owner’s second marriage now appear set to take over full ownership of the business. These situations often are the result of two common mistakes. One mistake is a failure to begin planning early enough, especially establishing who will and won’t be involved in the business. The second is failing to bring in professional advisors early who can assess the situation objectively and give good advice.

I suspect the real problem here was the owner’s failure to see rivalry and jealously between the siblings active in the business. He desired to retain control of the business as long as possible. Instead, he probably should have split it into different entities so the different siblings could go their separate ways and continue the businesses.

The 19-page suit, filed Friday in Montgomery County Circuit Court, alleges that Tammy Darvish refused a request by her two brothers, John and Jamie, that she sign a “side agreement” that would have given the brothers effective control over the company.

After her refusal, according to the court documents, John and Jamie “began pressuring their elderly father to cut Tammy out of the business completely.”

Last March, according to the suit, her father informed Tammy that he was turning over Darcars to her brothers, and she was being removed from her management position.