Gettys Near Accord on Division of Huge Trust

The bitter family feud surrounding the disposition of the $4-billion Sarah C. Getty Trust has apparently moved a step closer to resolution as the result of a new state law that enables the Getty family to divide the mammoth trust among beneficiaries.

During two closed hearings before Los Angeles Superior Court Judge Richard P. Byrne last week, Getty family lawyers debated their options in light of the new state measure--signed by Gov. George Deukmejian last Tuesday--that gives state courts the authority to divide personal trusts into two or more parts at the request of trustees or with the consent of all of the beneficiaries of those trusts.

Gordon P. Getty, a 51-year-old amateur musician and sole trustee of the Getty family trust, and three of his nieces, whose shares of trust income totaled about $35 million each in 1984, had been split over whether such a division was possible under previous state law.

But now, according to two lawyers close to the case, it appears that family members have agreed to an as yet undetermined division of the trust.

18-Month-Old Case

Another lawyer, Joseph Wyatt, who represents a separate client, 16-year-old Tara Getty (who stands to inherit some of the principal of the trust), said he expects that Judge Byrne will be asked to approve a settlement when hearings resume in Superior Court on May 21.

The bitter 18-month-old case, which involves about two dozen lawyers, stems from a dispute over the management of a trust established in 1934 by industrialist J. Paul Getty, then 42, and his mother, Sarah Catherine Getty, then 81.

Although income from the trust reached a hefty $330 million in 1984, the three nieces--Claire Getty, Caroline Getty and Anne Getty Earhart--accuse Gordon Getty of breaching his trustee duties when he arranged for Texaco’s $10-billion acquisition of Getty Oil last year.

Suits bought by dissenting family members asked the court to appoint other trustees for the trust, which had owned 40.2% of Getty Oil before the sale.

Dissenting family members, however, apparently became more receptive to settlement talks after state Sen. William Lockyer (D-Hayward) amended his new trust legislation in April to include a partitioning provision at the urging of William Newsom, an associate justice of the Court of Appeal and a longtime friend of the Getty family.

Law Clarified

“It was going to be considered this session anyway because (it) was among the recommendations of the state’s law revision commission,” said Newsom, who said his only role was to ask Lockyer to speed up consideration of the measure.

“If I were Gordon Getty’s lawyers, even if I were positive you could do this (partition), I wouldn’t want to go ahead without this statute,” Newsom said. “It clarifies the law on the subject. I think it’s going to be a great thing for the (Getty) family if they can get unified,” said Newsom, who added that he didn’t discuss the legislation with Getty family members.

However, several stumbling blocks remain in the case.

Byrne has yet to make a final ruling on his preliminary March 18 decision that $1.1 billion in capital gains taxes must be taken from the trust income distributed to beneficiaries. Also unresolved are lawsuits filed by the three nieces requesting that Byrne replace Gordon Getty as trustee and that Gordon Getty be required to pay damages for his administration of the trust.