Financial affairs of Abigail Kawananakoa may be overseen by conservator

A hearing will be held to determine whether a conservator will be appointed to oversee the financial affairs of Abigail Kawananakoa outside of her $215 million trust, a judge ruled Friday.

First Circuit Judge R. Mark Browning also ordered an updated medical evaluation of the Campbell Estate heiress.

At the same time, the judge denied petitions for an independent guardian to attend to the personal needs of the 93-year-old, saying she appears to be in good health and that there is no evidence that she can’t take care of herself with her spouse’s help.

The judge’s actions are the latest developments 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.

Kawananakoa’s mental capacity is at the heart of a conflict that started after she suffered a stroke in June 2017. Her then-attorney, James Wright, petitioned the court for control of the estate in a move that was spelled out in a successorship plan previously set up by the heiress in case she became incapacitated.

But Veronica Gail Worth, Kawananakoa’s life partner of more than 20 years and now wife, challenged the declaration, insisting that Kawananakoa is mentally capable of handling her own affairs. Worth is seeking to return control of the trust to Kawananakoa.

Attorneys for the Native Hawaiian Legal Corp., representing the trust’s newly reorganized Abigail K.K. Kawananakoa Foundation board of directors, have stepped into the fray, aiming to protect the largest part of the trust for the Native Hawaiian people.

Browning ruled last year that Kawananakoa was not mentally capable of changing or revoking her trust, or of firing and replacing its trustee. He appointed First Hawaiian Bank successor trustee, pending its acceptance.

But attorneys for Kawananakoa and Worth have continued to challenge the rulings. Meanwhile, millions of trust dollars have been spent in attorney fee and court costs.

In court Friday, Browning said the hearing for the conservator will be heard “as soon as possible” in front of another circuit judge, and the medical evaluation will be conducted by Los Angeles psychiatrist David Trader, the same doctor who examined Kawananakoa after her stroke and concluded she lacked financial capacity and wasn’t able to make complex decisions.

Trader did say, however, that Kawananakoa has testamentary capacity, which is about the same mental acuity needed to make out a will.

In ordering the conservator hearing, Browning said the law doesn’t give him any choice in the matter. The court’s policy, he said, is to let another judge preside over the hearing with both sides offering up witnesses. But he vowed to narrow the parameters of the proceeding to help accelerate the matter.

Browning, repeating the plea he has made in previous court hearings, urged the parties to put a stop to the conflict by reaching a compromise. Both sides have been meeting in mediation sessions for months but have been unable to find common ground.

“I really again would urge you to reach an agreement,” he said. “It’s absolutely the worst thing that could happen, to put Ms. Kawananakoa through this process.”

Kawananakoa sat in the courtroom with her wife and pet Chihuahua. Afterward she stopped to make a brief statement:

“I am so very grateful that this has come to pass,” she said. “It’s such a sad situation that someone would bring such egregious charges against someone that is innocent, and I’ve always tried to be. My heritage dictates that I must take care of the Hawaiian people, and everything I do is predicated on that.

“I thank all the people of Hawaii who have shown their support in various ways. Let them hear me say I have the deepest of gratitude for their support.”

Michael Rudy, Worth’s attorney, said outside the courtroom that he didn’t know whether Kawananakoa would testify at the conservator hearing.

“This is hopefully going to get resolved sooner rather than later,” he said of the legal battle. “She just wants this all to end — and so does her spouse. And she just wants to be in control of her assets.”

It’s uncertain how this ruling will affect the estate’s successor trustee, First Hawaiian Bank. The bank had agreed to become Kawana­nakoa’s trustee, taking over from her attorney, as long as the court appointed both an independent guardian and conservator.

In court, Edmund Saffery, the attorney for Wright, said the conservatorship was essential to allow the bank to take over as trustee and to secure a fortune that is threatened by back taxes, loan payments and debt.

“We’re looking at a financial abyss that will ultimately result in the evisceration of this trust. It is an existential threat not just to the trust, not just to the assets, but to the legacy Ms. Kawananakoa sought,” Saffery 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 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 Kawananakoa’s gift tax debts and other liabilities.