![\"\"](\"http:\/\/wpmedia.business.financialpost.com\/2018\/04\/ablan_leon.jpg?w=218&h=300\")
<\/p>\nAblan Leon opened the first Leon\u2019s Furniture store in Welland, Ont., in 1909.<\/p>\n<\/div>\n
\u201cMy father and I had many frank discussions about business and family,\u201d Marjorie said in a sworn affidavit filed in support of Anita Leon. \u201cI was lucky enough to spend some quality time with my father in the two years prior to his death. His message to me was always consistent. He loved his children equally and he wanted them to benefit from his wealth equally.\u201d<\/p>\n
Unfortunately, Anthony Leon also unwittingly sowed the seeds for the current feud by setting up a veritable Russian nesting doll of family trust and tax planning investments meant to maintain the family\u2019s wealth.<\/p>\n
Anthony, known in the family as Tom Sr., was one of 11 children of Ablan Leon, who opened the first Leon\u2019s Furniture store in Welland, Ont., in 1909, a few years after he and wife Lena immigrated to Canada from Lebanon.<\/p>\n
Now a publicly traded furniture giant, Leon\u2019s is currently controlled by four branches of the Leon family, each branch represented by Ablan’s four sons, including Anthony.<\/p>\n
Anthony spent his life at Leon\u2019s, working for 63 years in the family business and helping to spearhead its expansion throughout the 1950s and 1960s. He was chairman, CEO and president of Leon\u2019s until his retirement in 2005, when Terry took over.<\/p>\n
Tom and Anita Leon\u2019s court case unpacks family trust investments set up in 1998 by Anthony Leon for his seven children \u2014 Tom, Terry, Robert, Kevin, Marjorie, Cynthia and Debbie \u2014 \u201cto defer capital gains taxes, and preserve the family\u2019s control of Leon\u2019s Furniture Ltd.,\u201d according to a court filing from the brothers Terry, Robert and Kevin.<\/p>\n
Five of the siblings who reside in Canada are trustees of their respective trusts that hold common shares in five corresponding sibling holding companies. These holding companies each hold shares within a larger family investment consisting principally of Leon\u2019s voting shares. (Cynthia was going through a divorce when the trusts were set up in 1998 and, as such, was not put in charge of her own piece of the family investment, as per Anthony Leon\u2019s directions).<\/p>\n
But for Tom, an Arizona resident, the arrangement was different. Having lived and worked in the U.S. for many years prior to the formation of the holding companies, direct ownership of the company\u2019s shares would have had significant cross-border tax implications.<\/p>\n
As a result, Terry, Bob and Kevin were appointed trustees of a trust set up by their father whose capital and income beneficiaries were Tom and Anita. The shares attached to the holding company were given to Terry, Bob and Kevin rather than Tom, because of the tax implications of Tom\u2019s U.S. residency.<\/p>\n
Finally, the children of Terry, Bob, Kevin, Marjorie and Debbie were added as secondary trust beneficiaries, because Anita and Tom had no children.<\/p>\n
The arrangement appeared to go smoothly for years, with Tom receiving regular dividend proceeds from the family trust.<\/p>\n
But things changed after Tom was diagnosed with a degenerative spinal cord condition in 2012. Tom and Anita asked his brothers for additional funds from the trust to pay for medical bills and debts, including a $3-million mortgage on their house.<\/p>\n
![\"\"](\"http:\/\/wpmedia.business.financialpost.com\/2018\/04\/terry_leon-1.jpg?w=640&h=480\")
<\/p>\nLeon’s Furniture President & CEO Terry Leon.<\/p>\n<\/div>\n
After Tom fell ill, the brothers said they learned in 2014 that he was having financial difficulties \u201cas a result of having extended himself by way of loan and mortgage commitments,\u201d they said in court filings. \u201cThese debts were surprising, even given the applicant\u2019s extravagant lifestyle.\u201d<\/p>\n
The brothers put a plan in place to deal with the debt, they said in court filings, and Terry went over the plan with Tom.<\/p>\n
\u201cTom did not seem to understand that Terry was dealing with these matters, possibly due to the effects of his medical condition at the time,\u201d they said in court filings.<\/p>\n
The fight escalated, and both sides retained lawyers.<\/p>\n
Tom and Anita filed suit against his brothers in 2015, \u201cafter Tom felt that the trustees were breaching their duties as trustees … and that the trustees were becoming quite hostile to Tom in his time of need and expected access to the trust assets,\u201d according to Tom and Anita\u2019s court filings.<\/p>\n
Tom, whose condition deteriorated as he had a series of ischemic strokes, died in 2016.<\/p>\n
Anita now argues that assets in the trust and holding company \u2014 including more than $25 million worth of Leon\u2019s shares \u2014 should be considered hers or part of her late husband\u2019s estate.<\/p>\n
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Her court filings submit that the 1998 trust set up by Tom\u2019s father considered Tom and Anita to be its \u201cprimary beneficiaries,\u201d despite how it was structured for tax purposes. For the years up until his death in 2016, Tom received all the trust\u2019s dividend proceeds, and regular dividends have since then been distributed to Anita.<\/p>\n
The brothers argue that while the holding company\u2019s shares of Leon\u2019s at issue, which amount to two per cent of the company\u2019s outstanding shares, \u201care owned legally and beneficially by Terry, Bob and Kevin, it had always been the respondents\u2019 intention to use the proceeds for Tom, if necessary,\u201d they said in court filings. \u201cHe could not, however, require that they do so.\u201d<\/p>\n
Tom understood that his brothers owned the shares attached to the trust, the brothers argue in their court filing, \u201cwithout any legal obligation to ever make any transfer of those shares, and their proceeds to Tom.\u201d<\/p>\n
Their sister, Marjorie, disagrees.<\/p>\n
![\"\"](\"http:\/\/wpmedia.business.financialpost.com\/2018\/04\/20090623-leons800.jpg?w=640&h=480\")
<\/p>\nDescendants and children of Ablan Leon, Dr Joe Leon (right) and Catherine Repar pose with “The Leon’s Living Room,” an original life-sized bronze sculpture commemorating the 100th anniversary of Leon’s Furniture Limited in the company’s birthplace of Welland, ON, Tuesday, June 23, 2009.<\/p>\n<\/div>\n
In court affidavits filed in support of Anita\u2019s application, Marjorie argues that \u201cany claim by Terry, Bob or Kevin that they are indeed the ultimate beneficial owners (of the shares in question) \u2026 would be entirely inconsistent with the intention of my father to ensure that all of his children were treated equally with respect to the distribution of his assets to his children.\u201d<\/p>\n
She adds, \u201cit was only well after Tom became ill that Terry, Bob and Kevin began to assert a controversial position about the ultimate entitlements to the benefits\u201d of the shares.<\/p>\n
The brothers counter that Marjorie, a chartered accountant who worked as a financial executive at an electronics company in Montreal prior to her retirement, is not an impartial witness in the case.<\/p>\n
\u201cWhile (Marjorie) claims she has no antipathy toward her brother Terry, her evidence is replete with negative and disparaging comments about him, which significantly detracts from the credibility of her evidence,\u201d their filings said.<\/p>\n
Marjorie, they add, was not involved in their father\u2019s tax planning matters, but \u201cpurports to have knowledge of her father\u2019s intentions and makes several generalized statements in that regard.\u201d<\/p>\n
Anita is asking for Justice Glenn Hainey (who is also presiding over the Sears Canada Inc. bankruptcy) to declare that the shares in question are \u201cbeneficially owned\u201d by Tom\u2019s estate, even though the legal ownership, as such, is in the names of his Canadian brothers.<\/p>\n
![\"\"](\"http:\/\/wpmedia.business.financialpost.com\/2018\/04\/leons_tsx.jpg?w=640&h=413\")
<\/p>\nMr. Tom Leon, Chairman Emeritus, Mark Leon, Chairman of the Board and Terry Leon, President and CEO of Leon’s Furniture Ltd. open trading on Toronto Stock Exchange in celebration of its 100th year in business on January 14, 2009.<\/p>\n<\/div>\n
She argues that Terry, Kevin and Robert are in breach of trust in their role as trustees for failing to diversify the trust\u2019s assets and that they are in a conflict of interest as trustees because their children are secondary beneficiaries of the trust in question. She wants the Leon brothers to be removed as trustees and replaced by a slate of independent trustees.<\/p>\n
Anita Leon \u201cfeels she has no choice but to sue her husband\u2019s brothers to address a number of issues arising from the estate planning which we believe was primarily put in place for her benefit and that of her late husband,\u201d Robert Cohen, legal counsel for Anita Leon, said in an emailed comment.<\/p>\n
\u201cTom\u2019s death and the family litigation just adds a very sad and troubling chapter to an otherwise amazing rags-to-riches story of the Leon family.\u201d<\/p>\n
Calls requesting comment from the Leon brothers\u2019 counsel were not returned.<\/p>\n
A trial date is to be set in Ontario Superior Court this week.<\/p>\n
\u2022 Email: hshaw@nationalpost.com<\/a> | Twitter: HollieKShaw<\/a><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"
The family litigation just adds a very sad and troubling chapter to an otherwise amazing rags-to-riches story of the Leon family<\/p>\n","protected":false},"author":578,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[],"tags":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/6056"}],"collection":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/users\/578"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/comments?post=6056"}],"version-history":[{"count":1,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/6056\/revisions"}],"predecessor-version":[{"id":6062,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/6056\/revisions\/6062"}],"wp:attachment":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/media?parent=6056"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/categories?post=6056"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/tags?post=6056"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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