Written by Virginia Mack, CNN
A tie-breaking vote and a complicated divorce negotiation added to the financial stress of a complex business relationship. That’s the case that was reported by The New York Times earlier this week, which reported that Donald Trump and his father, Fred Trump, reached a financial settlement in 2014.
The subject? $500 million. Donald Trump’s stake in the Trump Organization, an enterprise, the billionaire told the Times, was “96%” of the business.
However, in a New York Times exclusive, “The Trump Revealed,” Donald Trump and his son Eric Trump made clear that the relationship had changed drastically in recent years.
Ericks Trump said of the business, “It’s called family. We’ve always thought it was important that business operate in a family manner.”
“It’s always going to be very much in the family,” added Mr. Trump.
Legal documents have since been made public, showing that Donald and his father, both Trump Organization managers, had legally planned for a fair division of the Trump properties during the final years of the former couple’s 53-year marriage. And in doing so, they used a technique known as “family trusts” — corporate structures that give huge amounts of control to members of the family while leaving the original trust in place — to accomplish it.
How a ‘family trust’ can impact a business
“Titles would normally be legally recorded on the books, but in the business of Trump, documents relating to the legal standing of all the business interests had been transferred to a ‘family trust,’ family trusts usually known as ‘Gates’ and ‘French Gates,’ one legal expert said.
“The Gates is a pretty standard procedure for legal purposes that is commonly used with family owners, to make themselves more difficult to liquidate or sell,” explained Edward Stavins, a Harvard University professor of business ethics and public policy.
The Gates are known as corporate entities with a corporate structure, or a structure for a business that functions more like a family member than an entity.
CNN contacted Fred Trump’s attorney, Peter Scales, for comment but has not received a response.