Legal Question in Business Law in Arizona

Probate estate, corporation and trustee troubles

S corporation set up with 2 board of directors: my husband and his sister. 2 Advisory commitee members: my husband and his sister. I believe 3 shareholders: My husband, his sister and his brother. Thier father died this year and left this corp to them. The sister's boyfriend is PR, trustee, and VP of corp. Sister is President and now also a trustee. My husband is IT officer and on both commitees listed above. My husband cannot be a trustee till he reaches the age of 35 currently 27.

His sister recently fired him and had him escorted off the company property which is also property in the estate (house to be divided 3 ways) by police twice, when he asked for the comapny records on past 2 years payroll and finances. Due to finding out the company is struggling and her and her BF salary. She now refuses to speak with him and has cut him off from anything having to do with the company they are planning to go to arbitration he would like to resolve this so that the company makes money for all 3 involved and she wants to remove him as director and shareholder so that she can have all the money and control for herself and boyfriend.Can he have her removed? Can she legally remove him from corp? Does he have any legal options to stop her?


Asked on 9/08/05, 10:15 pm

1 Answer from Attorneys
Donald Scher Donald T. Scher & Associates, P.C.

Re: Probate estate, corporation and trustee troubles

Yes, your husband has several avenues of recourse to follow. The person acting as personal representative of the father's estate, and the person acting as trustee of a trust, both have FIDUCIARY duties to the heirs of the estate and the beneficiaries of the trust, duties of loyalty, fairness, honesty and a duty to act only in the best interests of all interested parties, not in their own selfish interests. There are clear penalties under law for breach of fiduciary duties. Likewise, an office of the corporation owers a fiduciary duty to the corporation as well as to all shareholders. Your husband should retain a lawyer asap and take action before any more harm is done to the business or to his interests, individually. The board of directors has the authority to hire and fire officers of the corporation. The shareholders have the authority to hire and fire members of the board of directors. It is not for one individual to get rid of the other, particularly when both are shareholders.

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Answered on 9/09/05, 7:04 pm


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