When Atherton Richards set up his trust in 1972, a few things were clear. The trustee would be his nephew, Herbert M. “Monty” Richards Jr., who would also draw a portion of the trust’s net income for life.

He also would have broad power over the trust’s principal asset, Kahua Ranch, the historic Hawaii Island ranch known for its rolling hills and sweeping views.

And upon Monty Richards’ death, the trust document shows, the spectacular 4,000-acre ranch would go to his children, Atherton Richards’ great nieces and nephews — ownership passed on unencumbered “free and clear from any trust.”

Hawaii Island’s historic Kahua Ranch is the subject of a bitter internal feud involving a prominent kamaaina family.

Patricia Giles

Now, some 45 years later, the ranch’s future has become engulfed in a dispute among family members. At stake is the control of the historic property, which two of Atherton Richards’ heirs estimate to be worth $120 million or more.

“At its core this dispute is about a father, the Trustee, who at the age of 88 is no longer fully in control of his mental and physical faculties, and to the detriment of his own children, is using his power as Trustee to completely undermine the purpose of the Trust Agreement that he is supposed to faithfully administer,” says the complaint filed in state court.

The lawsuit, which runs 160 pages long including exhibits, tells the saga of an internecine feud out of Shakespeare — it calls the dispute a “’King Lear’ situation,” in fact — in which an aging father from a powerful family has fallen into a bitter dispute with two of his children over the family’s estate.

The dispute is so acrimonious that Monty Richards has removed his children from the board of directors of the ranch they have a vested interest in.

His rationale: The ranch will fail if his children are involved with the ranch. Two of them are firing back.

Bringing the suit are Monty Richards’ son, Herbert M. “Tim” Richards III, a Hawaii County Council member, and his sister, Patricia Kuualoha Richards Giles. Monty Richards’ two other children, Pam Richards Ketchum and John Richards, are not part of the suit.

Tim Richards and Giles’ attorney, Nick Kacprowski, and Monty Richards’ attorney, Peter S.R. Oslon, each declined to comment. However, in a declaration filed in separate court case, Monty Richards calls the assertion that he is incompetent “reckless.”

It’s hardly the first family fight over land, says Frances Miller, who teaches trusts and estates law at the University of Hawaii’s William S. Richardson School of Law. Miller said the case looks like “‘The Descendants’ redux,” a reference to the novel and movie about an old kamaaina family engaged in an internal fight over the long-held family lands.

“Regrettably, family fights over big property holdings are nothing new,” Miller said. “Trusts just prolong the period over which the fight can play out.”

While the feud likely won’t spawn a book or film, it’s seems every bit as contentious as the family dispute that purportedly inspired “The Descendants.”

As described in the suit, Atherton Richards was descended from prominent missionary families. He was the son of Theodore Richards, a former principal of Kamehameha Schools, and Mary Atherton Richards, whose name is memorialized on a building at the Manoa YMCA.

Atherton Richards was an officer in the U.S. Office of Strategic Services, president of the Hawaiian Pineapple Co., which later became Dole, and a trustee of the Bishop Estate, the wealthy land trust established by Princess Bernice Pauahi Bishop to fund Kamehameha Schools.

Kahua Ranch is still a working ranch and also generates income from renting facilities for events and offering activities for paying visitors.

Patricia Giles

At issue are two overarching and interwoven questions. The first is whether Monty Richards has breached his duties as a trustee while administering the trust.

The second is whether a Kahua Ranch shareholder agreement created by Monty Richards is lawful under Hawaii’s corporations statute and whether it violates the trust by purportedly locking up control of the ranch with a board of directors in perpetuity.

Under trust law, trustees generally have several fiduciary duties to the beneficiaries. Also guiding trustees is the actual trust document, which further spells out the trustee’s duties and powers. Although trustees have control of trust assets, ultimate ownership lies with the beneficiaries, who have the power to enforce the terms of the trust.

In this case, the trust document gives Monty Richards fairly broad power over Kahua Ranch while he’s still alive.

As another one of his sons, John Richards, sees it, his brother and sister are trying to take control of the ranch before their time.

Strife among the family members has spawned repeated lawsuits, John Richards said. And while he said he doesn’t agree with everything his father has done, he thinks his father has acted within his rights.

“Has he breached the trust? No,” John Richards said. “That’s the bottom line.”

But Miller, who is also a professor at Boston University School of Law, said Monty Richards appears to have gone too far.

“It’s pretty much a slam dunk unless there are facts completely at odds with the pleadings here,” said Miller, who reviewed the complaint, trust document, and documents filed by Monty Richards in a separate case related to the trust.

“Did he breach his trust? Yes. Can he do it with a (shareholder agreement) document? No. It’s that simple.”

Among other things, the plaintiffs allege Richards’ shareholder agreement creates a self-perpetuating board that will control the ranch even after the beneficiaries come into their inheritance. The heirs could sell shares in the ranch, but it appears the board would remain in place overseeing the new buyer’s property.

In addition, the complaint alleges Richards may voluntarily limit the way the ranch can be used by putting the land in conservation with an easement. Both of these, the suit says, diminish the value of the company.

Trust beneficiaries are concerned the trustee overseeing Kahua Ranch Ltd. may put the land in conservation, and thereby diminish the land’s value

Patricia Giles

Bill McDavid, a partner with the Montana-based ranch brokers Hall and Hall, said the provisions do raise concerns. A buyer would likely be concerned about the shareholder agreement, said McDavid, whose firm’s current listings include T. Boone Pickens’ Mesa Vista Ranch in Texas, listed for $250 million. The conservation easement also raises concerns, McDavid said.

“I’ve seen those have a ruinous effect on value,” McDavid said, although he added he had seen conservation easements have minimal effect on value, depending on the terms of the easement.

In court documents, Monty Richards has argued that creating the new shareholder agreement to remove squabbling family members from the board was necessary to save the ranch’s business.

“My aim was that a board of people other than my children would give Kahua Ranch Ltd. a better chance of financial success,” he said in a declaration.

“If my children are allowed to serve on the board, based on my experience and opinion, and the opinion of other independent board member, Kahua Ranch Ltd. will fail.”

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