(DailyMail.com) - The lover of a British health drinks tycoon who 'abhorred paying tax' is in a court battle with his siblings over his multi-million-pound fortune.
Maltese national Sheila Caruana, 59, was left Alan Lorenz's entire estate when he died in 2021 aged 78.
The couple had entered into a civil partnership just weeks before his death.
But now his three siblings - Robert Lorenz, 81, Anthony Lorenz, 77, and Vanessa Manasseh, 79 - want half of the fortune claiming it was only given to Ms Caruana to avoid having to pay inheritance tax.
Former divorce lawyer Mr Lorenz became a multimillionaire after giving up his legal career to sell weight-loss shakes through controversial nutritional supplements group Herbalife.
Mr Lorenz joined the company in 1984, rising to become a senior member and building a fortune which, by the time he died, included a £3.5m Maltese property, a £4m home in Mayfair, £8.8m in the bank and £2.1m worth of rights relating to Herbalife.
Yesterday, the case reached the Court of Appeal, where Mr Lorenz's siblings argued that their brother had trusted Ms Caruana to 'do right' by his family and split the estate with them.
They argue he had created a 'secret trust' under which she would inherit all his wealth, but be trusted to hand half of it to his siblings.
But Ms Caruana is fighting their claim on the basis that he left her with no binding obligation to give his family anything at all.
The case first reached court in December 2023 when a judge refused Ms Caruana's application to dismiss Robert's claim, but returned last June when another judge did dismiss it after an appeal.
The siblings are now fighting on, with Robert challenging the ruling at the Court of Appeal before Lord Justice Stuart-Smith, Lord Justice Zacaroli and Mr Justice Cobb.
During previous hearings, the court heard that Charterhouse-educated Mr Lorenz died a multimillionaire after making his riches selling health drinks.
Herbalife is a worldwide 'direct-selling' company, founded in 1980 to sell weight loss shakes, but expanding to produce other nutritional products, which it sells in over 90 worldwide countries.
Founded in 1980 in the US, Herbalife has attracted controversy, having been forced to deny claims of having a 'pyramid' type sales structure.
The company agreed to 'fundamentally restructure' its business in the US, and pay $200 million as part of a 2016 settlement of a US Federal Trade Commission case.
Mr Lorenz began his relationship with fellow Herbalife member Ms Caruana around 2012, but as there was a 23-year age gap between them was keen to begin tax planning for his old age.
Although previous wills left his siblings a share, in 2020 he made a new will, leaving everything to Ms Caruana, with whom he then formed a civil partnership so that she would not have to pay inheritance tax.
The family's claim was brought to court by Robert Lorenz, backed by his siblings, claiming that their brother had 'a history of aggressive tax avoidance and indeed an abhorrence of paying tax.'
Mr Lorenz was 'close' to all of his siblings, they continued, and there was no evidence he changed his mind and intended to cut them out, believing that Ms Caruana was '100 per cent honourable' and would follow his wishes, giving half his money to his family.
In a statement to the court, Ms Caruana denied any such trust, stating: 'At no time did he say that there would be any restrictions on my use of the assets. Neither did he give me instructions to deal with the assets he was leaving in a particular way.'
Last June, Mrs Justice Joanna Smith dismissed Robert's claim, finding there was no realistic prospect of establishing that Mr Lorenz had created a 'secret trust' benefiting his siblings.
She found that Robert had not established 'certainty' of what property the alleged trust related to or who its beneficiaries should be.
But appealing yesterday, Richard Wilson KC argued that the judge was 'plainly wrong' to dismiss Robert's claim on the basis that there was no realistic prospect of establishing a secret trust due to the uncertainty of what assets the alleged trust was over and who exactly the beneficiaries would be.
'Robert's pleaded case is that the subject matter of the secret trust was half of the residuary estate, consistent with Alan's previous wills, which had left half of his residuary estate to his siblings,' he told the appeal judges.
'There is no inherent uncertainty in that claim to justify granting summary judgment.'
He continued: 'Robert's claim is that Alan gave oral instructions to Sheila on how to deal with the residuary estate and that those instructions gave rise to a secret trust.
'There is clear evidence that instructions were given.
'The evidence is clear that there was at the very least some form of obligation on Sheila to make gifts to Alan's siblings in accordance with his settled and consistent intention to make provision for them.'
Urging the judges to allow the appeal and for Robert's claim against Ms Caruana to go ahead, he added: 'The question for the court to determine at trial is whether the obligation that was undoubtedly imposed extends beyond a moral obligation and amounts to a legally enforceable obligation giving rise to a secret trust.'
Ms Caruana's barrister Penelope Reed KC said the appeal should be dismissed, as Mr Lorenz had only ever expressed 'unspecified wishes' about what she should give to his family after his death.
His focus had been on avoiding inheritance tax, and to create a binding obligation on Ms Caruana to gift certain sums to his siblings would defeat that purpose, she said.
'It is common ground between the parties that Alan's overwhelming motivation was to avoid his estate being subject to inheritance tax, a goal that was impossible with the imposition of a secret trust and consistent only with leaving his estate to Sheila outright,' she argued.
'While Alan did express wishes for Sheila to benefit his family, Alan giving his estate to Sheila absolutely, with a view to her making gifts to his family, does not create a binding trust.
'Alan had a longstanding desire to avoid tax where possible and consistently went to some effort to do so - even living abroad for decades.
'When faced with the choice of having control over the gifting of his assets to any family members and having to pay inheritance tax, he chose with barely any hesitation to avoid the tax, accepting the uncertainty and lack of control.
'Once the proposition is accepted, as it has been by all parties, that Alan's overriding intention was the avoidance of tax, Alan simply could not have achieved that aim by leaving his estate on a binding secret trust.
'His goal was incompatible with an intention to create a secret trust, and was solely consistent with the his estate going to Sheila beneficially.'
The judges reserved judgment on the appeal until a later date.
By Matt Strudwick
