Before Walt Disney's youngest daughter, Sharon Disney Lund, died in 1993 of breast cancer at age 56, her three grown children gathered in a North Hollywood office and were told about the vast fortune that awaited them. Brad and Michelle were the then-23-year-old twins from Sharon's second marriage to Bill Lund, the real estate developer who scouted the 27,000 acres in Orlando that later would become Disney World, Walt's second "Happiest Place on Earth" after Disneyland in Anaheim. And then there was Victoria Disney, then 27, the daughter adopted by Sharon (who herself was adopted) with her first husband, Robert Brown. All three already lived comfortably. But this was a whole other level of wealth on the table.
Per the terms of their combined trusts -- today worth about $400 million -- Walt Disney's grandchildren were to receive 20 percent distributions, a good portion of it in Disney stock. The payouts were to be dispensed to the three children at the ages of 35, 40 and 45, once amounting to about $20 million (and now closer to $30 million) for each every five years. But there was one important caveat: Sharon empowered three trustees -- including, at the time, ex-husband Bill and older sister Diane Disney Miller -- to withhold distributions in the event the children did not demonstrate "maturity and financial ability to manage and utilize such funds in a prudent and responsible manner."
The caveat would prove to have a catastrophic impact on the Lund branch of the Disney family. Its interpretation by the trustees on the twins' 35th and 40th birthdays would lead to accusations of conspiracy and mental incompetence and would culminate in ugly depositions, complete with insinuations of incest, leading up to a two-week-long battle of a trial in December in Los Angeles Superior Court. On one side of the lawsuit is Brad, now 43; his lawyers; his father, Bill, 83; and his stepmother,Sherry Lund, Bill's fifth wife.
On the other: the three current trustees, each paid up to $1 million annually (and some years more) for their role, who counted Brad's twin sister, Michelle, as a witness, and who were represented by lead attorney Peter Gelblum. Brad's side was contesting the trustees' rulings for his 35th and 40th birthday distributions that determined he lacked the mental abilities to oversee them. The trustees had reached the opposite conclusion about his twin sister, Michelle, awarding her millions on her birthday despite word of her history of drug addiction and a brain aneurysm in 2009 that had left her with uncertain mental abilities.
The heated testimony included Sherry accusing the trustees essentially of brainwashing her stepdaughter Michelle against her and Bill. She also blamed them for trying "to ruin our family" and attempting "to kill my husband over this," as Gelblum probed whether Sherry was behind a "campaign to sue everyone who gets between [her] and Brad's money." For a $140 billion company built on appealing to families, the inheritance war has been an ugly sideshow. And it is a far cry from the way things used to be in the Disney dynasty.
Since Walt Disney died in 1966 at age 65, his two children, Diane and Sharon, shied away from Hollywood. Diane had seven children of her own, while Sharon -- who briefly became a model and actress (she had a small role in the 1957 film Johnny Tremain) -- settled into a comfortable life as a mother of three kids. Says Jim Korkis, who now writes for an all-things-Disney site called Mouse Planet: "When I worked at Walt Disney World and asked about Walt's grandchildren, the response was, 'They spend their time managing their portfolios.' Walt was adamant about keeping his children and grandchildren away from the business." With the exception of Walt's nephew, Roy, who helped bring in Michael Eisner as CEO in 1984 to revitalize the company -- and later fought unsuccessfully to remove him -- the family largely has stayed away from corporate affairs, choosing to exert their wealth and power in other ways, including philanthropically.
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Sharon gave birth to Brad and Michelle on June 5, 1970, and endeavored to shelter them from Disney fame as they grew up in Los Angeles. Today, Brad tells THR he led a "very normal life" despite the family fortune. (Michelle couldn't be reached for comment for this story.) Although Brad never met his grandfather Walt, he picked up the patriarch's enthusiasm for model airplanes and trains, and until recently, he was very close with his twin sister.
Both Brad and Michelle attended private schools for children with learning disabilities. The extent of the disabilities -- for Brad in particular -- would have a major impact on the trustees' rulings. At various points in his life, Brad was described by his father as having Down syndrome and fetal alcohol syndrome. After he received a certificate in culinary preparation from Cape Cod Community College, Brad worked several jobs, including at a restaurant bussing tables, in the mailroom of an insurance company, making smoothies at a juice bar and working the counter at a UPS store, which he also owned. In 2003, Brad moved from Orange County to just outside Phoenix, next door to his father, Bill, and stepmother Sherry, whom Bill married in 1999, six years after Sharon died and about 20 years after they divorced. Sometime later, trustees came to believe that Sherry began to look into adopting Brad.
Michelle, who was diagnosed with dyslexia as a child, never has held a job. She owns three homes, spending much of her time in Newport Beach, Calif.
By all accounts, Michelle, Brad, Bill and Sherry -- the Lund side of the Disney clan -- had gotten along well. After their mother, Sharon, died, Michelle and Brad took annual trips with Bill and Sherry to a Wyoming farm ranch and Hawaii. Together, the family bid on and bought Elton John's "Candle in the Wind" original lyric sheet for $400,000 at an auction -- Brad wielded the paddle -- and donated it to the Princess Diana Museum. All of the Lunds were committed to the Sharon Disney Lund Foundation, donating money to cancer research and visiting the scientists to personally view the results of their breakthroughs.
Victoria, the twins' half sister from Sharon's first marriage, was a different story. Victoria was said to live a disheveled existence, her hands blackened from heroin use. In her last years, Victoria would charter planes and splurge on $5,000-a-night suites at the Royal Palms apartment homes in Las Vegas. She once went on a Disney cruise ship and destroyed her suite in such spectacular fashion that Eisner, then-CEO of the company, had to call the trustees and make them pay for the damages. The family staged numerous interventions, to no avail.
Yet when Victoria turned 35, the trustees signed off on her birthday distributions of $20 million. A year later, in 2002, she was dead. Her share of the family fortune was added to Brad's and Michelle's. (Per the terms of the trust, any nondisbursed money gets bequeathed to the children, siblings or charity.) Sherry later would testify about Victoria's sad tale to question the competence of the trustees.
On June 5, 2005, when Brad and Michelle turned 35, the trustees -- including Bill and a family financial manager named Robert Wilson, who replaced Sharon's sister, Diane, when she resigned in 1997 -- handed down the split decision. They gave Michelle her millions but denied Brad his money because they felt that he hadn't demonstrated financial maturity. At some point in the past, Michelle was said to have suffered from her own addiction issues, but the trustees still ruled in her favor. (Sherry later testified that Michelle continued to partake of prescription drugs and alcohol, though other accounts insist a family intervention solved the problem.) Perhaps because Brad already was receiving about $1 million annually from family trusts, he initially didn't sue over not getting his share.
Despite Michelle's past problems, it wasn't until she suffered a brain aneurysm and went into a coma in 2009 that her relations with the rest of the Lunds took a dive. For two months, Michelle was hospitalized in an Orange County facility. Doctors described her condition as "grave," and for some time afterward, even with months of rehabilitation, she couldn't hold a thought for more than 20 seconds, according to later testimony.
While Michelle was being hospitalized, Bill informed trustee Wilson that as soon as Michelle could travel, he wanted to take her to one of the best neurological centers in the country -- 10 minutes from his and Sherry's home in Arizona. The trustees began to harbor suspicions, mostly premised on the idea that Sherry was conspiring to gain control over her stepchildren and, ultimately, their inheritance.
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At the same time, Michelle herself began to grow wary of her father and stepmother. The prospect of being kidnapped by her father was raised to her. At a later deposition, Michelle testified: "I had a lot of people talking to me about the possibility of what might happen." She added about her stepmother, "I've learned some things about her that just don't make me feel secure," probably referring to unsubstantiated rumors that had begun to surface that Sherry allegedly commissioned a hit man to kill her ex-husband William Blair, who lived to talk about it. Michelle consequently hired two bodyguards to physically bar Bill and Sherry from visiting at the hospital and had her father removed as her health care proxy.
A breathtaking flood of litigation followed. Brad sued trustee Wilson's wife, Gloria, for allegedly assaulting him at Michelle's hospital (Gloria Wilson admitted trying to hug him). Sherry sued Michelle's best friend since childhood, Dominique Merrick, with claims that she started the hit man rumor. (Sherry lost the case when it was traced to a family lawyer instead.) And most importantly, the other trustees sued to remove Bill from their fold, based on an allegation that several years earlier, Bill had used trust money to score some $3.5 million in kickbacks from a real estate deal.
When confronted about allegedly taking the kickbacks, Bill presented a 2003 letter from Michelle purporting to authorize the deals. (A handwriting expert examined it, a trustee later would testify, finding it to be a forgery.) Bill exited as trustee, telling THR today that he bowed out voluntarily on the recommendation of his cardiologist. As part of a settlement, he admitted no wrongdoing and, at the behest of son Brad, was granted $500,000 a year for the rest of his life by an Arizona court "as extraordinary fees for past services."
With Bill out, the inheritance came under the management of Wilson, Andrew Gifford and Doug Strode -- the latter two were involved with the financial affairs of the family through their positions at U.S. Trust, a private bank serving high-net-worth individuals. By the time of her aneurysm, Michelle had developed a sense of trust with Wilson and Gifford, naming them temporary conservators of her estate instead of her dad and stepmother.
Bill contested Michelle's decision, filing a petition to establish a conservatorship over her in 2010. He alleged that Wilson, Gifford and Michelle's childhood friend Merrick had taken advantage of his daughter's compromised condition and exerted undue influence to control her $200 million in trusts. According to Wilson's and Merrick's lawyer at the time, it was the other way around, repeating word from one of Michelle's friends who said that there existed "documents that would prove that Bill wanted to pull the plug on Michelle for financial gain, that he would benefit greatly from her death."
After a trial that took place in summer 2012, Orange County Superior Court Judge Mary Fingal Shulte denied the Lunds' conservatorship petition, which prevented Bill and Sherry from taking charge of Michelle.
Meanwhile, as everybody fought over Michelle, her twin brother had his own legal issues.
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In 2009, the same year Michelle suffered her aneurysm, Sharon's sister, Diane, no longer a trustee (and since deceased), plus two of Brad's half sisters from one of Bill's five marriages, filed a guardianship petition in Arizona to appoint a third party to supervise Brad's care. The following year, Michelle joined them. The still-pending petition cites the need for an appointment of a guardian because it "cannot be disputed that Bradford D. Lund is an incapacitated adult as a result of his chronic cognitive deficits and mental disorders."
In the middle of all this, on June 5, 2010, Michelle and Brad celebrated their 40th birthday. That month, the trustees held a meeting and reached the same conclusion as five years earlier, giving Michelle her money. But based on concerns about the influence that Bill was wielding over his son, the trustees saw fit again to decline to give Brad his fortune, setting the stage for the trial that took place in December.
On Dec. 9, 2013, Brad's lawyers presented their argument to L.A. Superior Court Judge Mitchell Beckloff, saying the trustees abused their discretion by denying him his 35th and 40th birthday distributions. In attendance were Bill and Sherry, who tells THR that Bill, 83, is frail and perilously near death. Brad and Michelle also were present. (Even before the trial began, the venom flowed: Bill filed a $100 million defamation lawsuit against the trustees' lawyer Gelblum, who then demanded that Bill's lawyer be barred from the courtroom.)
Among other contentions, Brad's legal team asked why, in light of granting drug addict Victoria her $20 million, the trustees refused to hand down money to Brad, known for his frugality. They asserted that the trustees did this for their own gain. Take Michelle. Why did she get her share of the trusts and not Brad? "The answer is simple," said Brad's lawyers. The sister's distribution went into the same bank, First Republic Trust Co. (FRTC), that already had been handling the money, "ostensibly to be professionally managed," they said -- meaning that FRTC would continue to receive more than $675,000 a year in management fees from the trusts. Brad hadn't set up an asset management program for his distributions, potentially denying FRTC the ability to receive a cut.
As for the trustees themselves, their compensation is based in part on the amount of money in the trusts, which of course is greater with Brad's fortune in it than without. "The trustees are well-compensated, and I was, too, for many years," says Bill. "It was anywhere between $450,000 to $1 million [apiece] a year, and in some years, far greater." (It is worth noting that when he was a trustee, Bill himself had voted to deny his son's distribution on his 35th birthday, only coming to see it as an injustice after he no longer was earning trustee income.)
The trial testimony of Gifford, the Disney financial manager and trustee, underscored belief that Bill wielded undue influence over his son, particularly troubling considering his history with Michelle's trusts. "At the 40th birthday distribution, it was apparent that Brad relied almost exclusively on Bill Lund for financial assistance," said Gifford. "Here was a person that was not only Brad's father but his financial confidante, and I had evidence that he took profits, and when he tried to justify it, he did it with a fraudulent and forged document." Gifford also testified "Brad had considerable disabilities that were evident."
During previous legal proceedings, Brad's physician submitted a report that said he had "a chronic cognitive disability with two years progressive decline and unstable behavior" and "limited insight." The court tapped a medical investigator who came to the conclusion that his conditions required supervision. (Since then, Sherry says that they've consulted with four other doctors who have judged Brad to be competent.)
As evidence that Brad did not understand the value of money, Wilson testified about a 2004 family trip to Sweden to check out a major breakthrough in cancer research. "At a gift shop, we were looking at a train set," said Wilson. "There was a red one, a blue one and a green one, and he couldn't decide which one he wanted. I said, 'Brad, why don't you buy all three of them? They're $15.' And he says, 'Oh, I can't afford that.'" Wilson continued, "The following night, we were at a gift shop on a ship, and they were selling these Russian eggs, and they were around $500 or more each, and I say, 'Brad, what did you get?' He said, 'Look what I got. I got these three Russian eggs.'"
It was on this trip that Wilson said he learned from the original attorney who drew up Brad's trusts that the divisive "competence" caveat, at the root of all the fighting, was "specifically for Brad; Sharon did not want to highlight Brad to be different and treated different than his sisters. It was code words that Brad will never get his distribution."
Michelle took the stand on behalf of the trustees, testifying about her increasing isolation from her brother since his move to Arizona. Wilson already had described Brad as initially unhappy with his new home ("He'd say, 'Get me out of this hell hole'") and that since Brad relocated, it had become tougher to communicate with him ("People would screen the calls").
Near the end of the long trial, Brad himself took the witness stand. (Before the trial, during depositions, Gelblum questioned Brad about whether he had physical relations with Sherry's daughter and his stepsister, Rachel, who lives with him. Brad denied it, then spent two days distraught in his room afterward, according to Sherry.) Asked whether his condition has improved since 2006, Brad said it had, explaining: "Well, there are several reasons. Number one, I've got glasses. Number two, new hearing aid. Number three, I'm on no medication. And number [four], I don't get as flustered as easy. I have a much better memory."
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Brad spoke about the various jobs he's held, why he shut down the UPS store he bought and how he considers himself now retired. Along the way, he tossed around terms like "guardian ad litem" and said that no one bothered to pick up the phone to tell him he had been denied his birthday distribution. He also explained why he no longer wants FRTC to manage his assets: "They keep my trust hostage, and they refuse to hand me over what is legally and rightfully mine."
On March 25, Judge Beckloff issued a proposed decision, one that made it clear that the trustees weren't keeping Brad from his money so that they could earn more for themselves. "The court is not persuaded that the Trustees have acted to withhold Mr. Lund's birthday distributions for fee-generation purposes," wrote Beckloff. "The court is convinced that the Trustees sincerely believe that Mr. Lund does not have the maturity and financial ability to manage and utilize a substantial trust distribution. The Trustees are legitimately concerned about Mr. Lund's ability to protect himself from those around him who may wish to take financial advantage of him."
Brad's team can claim one small victory. The judge agreed that proper steps should be taken to remove FRTC as the institutional trustee in favor of Mutual of Omaha Bank. "While Bill Lund and Sherry Lund may have fomented Mr. Lund's dislike and distrust of FRTC, the court finds that dislike and distrust sincere," noted Beckloff.
Though the trial is over, the harsh aftermath continues. "We've heard about other trustees turning on families," says Sherry from her home in Arizona. "We never thought it would happen to us. When it does happen, it's devastating and overwhelming. It has ripped Michelle and Brad apart." Gelblum declined comment.
Asked why his daughter testified against her brother on behalf of the trustees, Bill answers, "Stockholm syndrome."
Not surprisingly, the legal fight isn't over. In the event that the ruling is final, Sherry promises an appeal. Plus, the guardianship petition over Brad still is pending. And soon will come another big birthday: Next year, the twins turn 45. Trustees once again will vote on whether to turn over tens of millions of dollars to Walt Disney's grandchildren. And all that might be a prelude to the battle over the hundreds of millions that Brad hasn't received. Can he bequeath it to his stepsister Rachel? That's why the trustees believe Sherry is trying to adopt Brad. Whatever courtroom they meet in next, it will be far from the happiest place on Earth.
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