Thursday, December 22, 2011

Heiress Huguette Clark: Where is the truth?

A young Huguette Clark
Guess who just got an early Christmas present? That would be me.

Now, it's not a traditional present wrapped with ribbon etc. but, it comes in the form of an update on the case that I have been obsessed with since day-one ... the case surrounding the estate of copper heiress Huguette Clark.

I'm telling you ... I could not click the link fast enough when I saw the headline on MSNBC.com this morning.

So, here's the dish: as you'll remember, Ms. Clark died earlier this year - just shy of her 105th birthday - surrounded by many of her beloved dolls and the nurse that had been hired to care for her at the New York Hospital. Registered under an assumed name, Huguette Clark actually lived at Beth Israel Medical Center in Manhattan for some 20 years.

Soon after her death, Huguette Clark's Last Will and Testament was filed and released to the public - finally giving us a glimpse of what was to become of her $400M estate.

As you can imagine, people started clamoring for a piece of that gigantic pie. But, Huguette Clark's Will was clear: she specifically laid out what was to go where and even specifically cut out her distant relatives.
I intentionally make no provision in this my Last Will Testament for any members of my family, whether on my paternal or maternal side, having had minimal contacts with them over the years. The persons and institutions named herein as beneficiaries of my Estate are the true objects of my bounty.
Let's be clear: this means that the thirteen half-grandnieces and half-grandnephews as well as the eight half-great-grandnieces and half-great-grandnephews, all descendants of Senator Clark and his first wife, Katherine, were not to receive one single penny of her fortune. 19 of these distant family members disagree, which is why they're contesting the Will.

But, I've asked the question before: is the money really theirs to get?

907 Fifth Avenue | Manhattan
Ms Clark was 19 years old when her father died and at that time, she and her mother moved to the penthouse at 907 Fifth Avenue. In addition to living with her mother, Huguette Clark was well taken care of, financially speaking. She received an allowance of $7,500 a month (that would be about $100,000 a month in today's dollars), and when she reached 21 she inherited one-fifth of her father's estate. This was an even split with his children from his first marriage to Katherine. The entire estate was estimated at up to $300 million, or about $3.6 billion in today's dollars.

So, don't be fooled when you hear "heiress to the Clark copper fortune". She was not the sole heir to the entire fortune as Senator Clark's fortune was fairly divided among all of his living children. So, in a sense, the extended family already got theirs and this fortune truly was Huguette Clark's to do with whatever she pleased.

Money hungry relatives aren't the only ones causing trouble for Huguette Clark's estate. Trouble has been afoot from the very beginning of it's execution. Wallace Bock, Ms. Clark's attorney and her accountant (known felon) Irving H. Kamsler, have been under investigation from the get-go for potentially miss-handling Huguette Clark's finances.

The news released yesterday by the Associate Press only compounds the distrust of Bock and Kamsler - in fact, the public administrator in this case, Ethel J. Griffin, has just asked the court to remove Bock and Kamsler as executors, a position that would normally pay each of them about 2 percent of her estate, or roughly $8 million each.

Why have them removed? Let's go down the list, shall we? From MSNBC.com:
The public administrator alleges that while Huguette Clark lived as a recluse in New York City hospital rooms, attorney Bock and accountant Kamsler:

* Failed to file federal gift tax returns for Clark for the years 1997 through 2003, when she made approximately $56 million in gifts to individuals. The gift tax and generation-skipping transfer (GST) tax due would have been about $41.5 million.

* Charged her for filing tax returns that were not filed.

* Paid only $7.5 million in estimated tax payments toward the gift tax in those years.

* Failed to pay the remaining $34 million during the years since, exposing her to millions in IRS interest and penalties for failure to file.

* Failed to tell Clark about the unpaid taxes or possible interest and penalties, even though she had sufficient liquid assets to pay the bill in full.

* Filed false returns with the IRS for the years 2004 through 2009, claiming that previous gift tax returns had been filed, and understating Clark's current tax liabilities by more than $7 million.

* Under-reported and underpaid by millions her federal taxes.

* Misrepresented to the IRS that returns had been filed.

* Lied to the IRS, with Kamsler claiming he was unaware of a $5 million gift to Clark's nurse, when documents show he listed that gift on a profit and loss statement seven months earlier.

* Lied to the public administrator, claiming that they were searching for the gift tax returns, until the IRS disclosed that none had been filed.
No joke, Friends ... this means that Huguette Clark's estate could owe the IRS $82,000,000. And no, I didn't type too many zeros. Eighty two million dollars. $34M in gift and generation-skipping transfer (GST) taxes - yes, I linked 'GST' because I had no idea what it was either - plus, her estate also potentially owe late filing and late payment penalties in excess of $16M, PLUS interest on the unpaid taxes and potential penalties in the amount of approximately $32M.

In addition to all of this, the public administrator's office said it is investigating what it believes are other violations of trust - these include improper solicitation of gifts, abuse of powers of attorney, and making gifts without authority.

In order to distance himself, Kamsler resigned this week as executor of Huguette Clark's estate. A statement released by Kamsler's attorney reads:
"For the past 3 decades, Mr. Kamsler has served professionally and diligently as Ms. Clark's accountant. Although Mr. Kamsler is fully capable of remaining as a preliminary executor to Ms. Clark's estate, the distant family members and the Public Administrator have made it impossible for him to carry out her wishes. Therefore, Mr. Kamsler is voluntarily removing himself as Preliminary Executor, with the hope that Ms. Clark's last wishes be respected and to put this whole matter behind him."
Let's break this down: clearly, *if* they acted outside the best interests of Ms. Clark, Bock and Kamsler should be prosecuted ... and honestly, if I believed in hell, I think there would be a particularly bad section that houses those who prey on the generosity of elderly people, and this "you screwed over the elderly" section would have openings in it for Bock and Kamsler.

Clearly, Huguette Clark's family was distant to say the least - having had "extremely little or no contact with Ms. Clark at any time during her nearly 105-year life." Also, while they say that it had been Clark's wish since 1926 to leave her estate to the family, it seems that Clark's attorney feels that "The family members motion is utterly lacking in supporting facts and is replete with scurrilous innuendo."

Clearly, Huguette Clark seemed to be quite generous with her fortune - her "loyal nurse, friend and companion Hadassah Peri" already owns a $200,000 Bentley luxury sedan and five houses. Money for four of those houses came in the form of gifts through the years from Ms. Clark. Above and beyond this generosity, Peri is set to receive 60 percent of Ms. Clark's total estate, worth about $33 million, including investments and much of Ms. Clark's real estate holdings. Peri taken up a battle of her own against the 'family members'. To which they've responded in kind.

Huguette Clark's Bellosguardo | Santa Barbara, CA
And clearly, Huguette Clark love the arts. No one ever understood what Huguette Clark "did" for a living - other that live her life in seclusion while her fortune continued to grow. Interestingly enough though, in the occupation section of her death certificate, Ms. Clark is listed as "Artist". That's why I think this section from Huguette Clark's Will is of utmost importance:
I direct my Executors hereafter named to form a private foundation ... to be named "Bellosguardo Foundation" and take all necessary steps to organize, operated and qualify said foundation as an educational organization ... for the primary purpose of fostering and promoting the arts.

I give, devise and bequeath to said Bellosguardo Foundation, my real estate in Santa Barbara, California at 1407 East Cabrillo Boulevard, known as Bellosguardo and all of the personal property contained therein or used in connection therewith ... as well as all of my works of art [Except the Water Lillies], musical instruments, rare books and library contained in my apartments at 907 Fifth Avenue, New York, New York and policies of insurance covering same.
How remarkable that the Bellosguardo Foundation could begin with approximately $8M in it's coffers and could possess all of Ms. Clarks rare belongings ... all of which could be housed on 24-acres of Santa Barbara oceanfront property in the Clark family's 21,000-square-foot mansion. What a gift to the arts community. I hope it's a gift that remains intact.

I also hope that he truth - which lies somewhere in the middle of all of this drama - can be unearthed and that Huguette Clark's wishes can be carried out accordingly.

The saga continues with a hearing scheduled on Friday in Surrogate's Court in Manhattan on the family's request to intervene in the case, and the public administrator's request to remove Bock and Kamsler.

Please, tell me someone is making a movie out of this. Please?!

4 comments:

marly said...

Thank you so much for satisfying my obsession with Huguette Clark. You did all of the work and I appreciate it.

Geoff Granfield said...
This comment has been removed by the author.
Geoff Granfield said...

For the duration of tax filing a taxpayer will be required to make some tough judgments, just like whether to file personally utilizing the paper method or web based software, or having a tax specialist. For some the idea appears insignificant though the decision can affect how large your refund, a tax owed, or perhaps an IRS audit. Know the advantages and disadvantages to every one choice right now.

tax tips

Paul said...

This blog came up when I searched for "Why am I obsessed with Huquette Clark". I live in Santa Barbara so have been obsessed with this story since I moved here from NYC back in 2011. Her ocean front property on the coast is the jewel of Santa Barbara. Recently I went to the book signing of the new book about her, "Empty Mansions". I can't figure out why I am obsessed, so it's nice to know others are too. Thanks for your post. Hope there is a movie too.

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