As the Estate of James Campbell nears its 2007 end date, an heiress to part of the $2.2 billion fortune is mounting a late objection to the trust's termination plan, saying it favors one group of family members over another.

Mary McGrath, James Campbell's great-granddaughter, alleged that the estate's board of trustees is undervaluing the trust's vast real estate assets at the expense of family members like herself who have opted to take cash when the 105-year-old private trust ceases.

"Mary continues to want the termination plan to succeed but wants the trustees to live up to their responsibilities to her and the other cash takers to fairly and impartially implement the termination plan," McGrath's Chicago-based attorney, Harmon Brown, said in a June 29 letter to the estate.

"Mary believes that the trustees ... have consistently skewed the termination plan toward the takers of shares in the company to the detriment of the cash takers."

David Heenan, chairman of the estate's board of trustees, said the estate is studying McGrath's letter. Heenan said the estate receives similar challenges "from time to time" but takes McGrath's objections seriously.

He declined further comment.

McGrath could not be reached for immediate comment and Brown declined to elaborate on the content of the letter.

McGrath is president of local interior designer Philpotts & Associates Inc. As a Campbell descendant, she is entitled to about 2.8 percent of the trust's assets, or more than $40 million, according to trust documents.

The estate — a private, for-profit trust set up in 1900 to benefit the descendants of Scottish carpenter James Campbell — is one of Hawai'i's largest private landowners and the prime mover behind the residential and commercial developments in Kapolei.

The trust is set to dissolve in January 2007 as mandated by Campbell's will, but several years ago Campbell's descendants voted unanimously to set up a successor company, James Campbell Co. LLC, that will continue to own and develop real estate in Hawai'i and on the Mainland.

While it's difficult to gauge whether the dispute will delay the termination process, it could prove costly for the estate.

The trust is borrowing hundreds of millions of dollars to pay for beneficiaries who choose to take cash instead of stock. Any rise in the value of the estate's assets would force the trust to increase their payouts to the cash takers.

By contrast, the estate does not have to increase cash payments to stock owners since the value of their shares appreciate along with the company's holdings.

"If the suggestions in this letter leads to an increase in the value of the estate that cannot be covered reasonably with existing amounts of debt, then Mary is willing to accept shares of the (new) company for any increased value," Brown said.

McGrath was among the Campbell descendants who approved the termination plan, which received state Probate Court approval in 2003 and was the product of nearly a decade of planning spearheaded by the estate's board and its consultant J.P. Morgan.

Brown said in the letter that his client did not object to the termination plan when it came up for a vote several years ago because she believed that the trustees would implement it fairly.

But after a review by local real estate consultant Wendell Brooks, Brown said McGrath believes that the estate's assets are being undervalued.

Brown faulted trustees for appraising the estate's land on a parcel by parcel basis and not as a diversified portfolio of real estate assets or a group of portfolios of properties.

Brown said the latter portfolio approach will generate a premium for the estate's land holdings and cited the Estate of Samuel Mills Damon's $480 million sale of its industrial holdings in Mapunapuna to Massachusetts-based HRPT Properties Trust in 2003.

The Mapunapuna sale — which included about 250 different parcels — sold for a premium because the properties were sold as a portfolio and not on a piece by piece basis, he said.