Huguette Clark

Planned Giving Nightmare Finally Winding Down

For longer term followers of this blog, you should recall the Huguette Clark story as one I reported on regularly.  You can read my posts on this story (click here for older posts), or the tons of internet articles, or even the book (and possibly movie)!  Just do a google search on her.

My interest, in brief, was that for a period (apparently the crucial period) of time in the mid-2000s I was the Planned Giving Director for Beth Israel Medical Center in New York, where Ms. Huguette Clark (a reclusive heiress) lived for over 20 years – paying rent and other costs to stay in the hospital.  The youngest daughter of William Andrews Clark (1800s Copper Baron, U.S. Senator, Wealthy Celebrity), Ms. Clark only did her will very late in life, and of course, did two of them within a month or so (at the same time I had her accountant at one of our planned giving events – to see if he would offer any clues as to whether the hospital might be in for a large bequest).  We assumed she had over a billion in assets (she passed away with over $300 million), so she was actually the “great hope” for Beth Israel to rebuild itself, if she, of course, would put Beth Israel in for 10% or so!  Wishful thinking.

In the meantime, the hospital did a wonderful job caring for her as she lived to 104 (even though she was a wreck when she arrived at Beth Israel 20+ years earlier).  And, Beth Israel’s bequest, in her second will, was only for $1 million.

What was worse, though, and why this was the ultimate planned giving nightmare, was that her great, great half nieces and nephews (or whatever distant relationship you can think of), none of whom (or their parents or even grandparents) even met Ms. Clark while she was alive, had orchestrated a campaign to smear her advisors and caregivers, and create a case for challenging her estate (which cut them out, for the most post and left everything to charity and her nurse and some friends).  They only succeeded in wresting $30 million or so from the estate (paltry considering the legal fees they probably incurred). But, they got one last bite at the apple – the settlement with the estate allowed the family to pursue Beth Israel Medical Center for the money they “stole” from Ms. Clark over the years. (Not sure if the Estate was still pursuing Beth Israel or somehow the long lost relatives were)

It is a great story, by the way, and I do recommend checking out Empty Mansions (http://www.emptymansionsbook.com/) by Bill Dedman. But, the planned giving angle has to do with trouble organizations can find themselves in. I am sure that Beth Israel spent millions of dollars in legal fees dealing with this case – just my guess.  And, for what? A million dollar bequest?

Anyway, the case is finally, finally is ending!  Guess what? The family missed the statute of limitations! “A Manhattan Surrogate Court judge, Nora S. Anderson, ruled last week that the statute of limitations had expired for the estate to argue that officials at the hospital, Beth Israel Medical Center, had manipulated Ms. Clark into donating.” That is from the New York Times’ reporting on this one. Click to see that story.

Ironically, Ms. Clark and her case outlived almost everyone involved – even the hospital that took care of her.  Beth Israel Medical Center is now owned by its arch rival Mount Sinai, so as a former Beth Israel guy, it would not have bothered me so much if Mount Sinai took a big hit on this one. Still, it bothered me how dedicated these long, lost relatives were to grabbing money from Ms. Clark (they were descendants – grandchildren and great grandchildren of Ms. Clark’s older half-siblings – all of whom were adults when Ms. Clark was born in 1906 – all descendants of a formerly wealthy family that squandered their wealth along the way).  This was their last chance as getting something.

Anyway, one last quote from Beth Israel’s doctor should send chills up our planned giving spines:

In 2000, Ms. Clark donated Manet’s Pivoines dans une bouteille (Peonies in a Bottle), 1864. When the painting sold far under its expected price, one doctor sent an internal memo that read: “I told her about the disappointing price of the painting, but she didn’t take the bait and offer a half-dozen more.”

Having been on the “inside” at Beth Israel, I can testify that there was no conspiracy to unduely influence Ms. Clark.  She was in charge, not the hospital.  It was only wishful thinking and some rather unpleasant statements that should never have been put to writing.

If you made it this far, you have to see this next post about a stolen painting of Ms. Clark’s that the F.B.I. recoved only to gift it to the purchaser’s favorite museum.  Click here for that one.

Huguette Clark Planned Giving Nightmare Finally Winds Down

If you are interested in one of the most intriguing and perplexing planned giving tales (Planned Giving Nightmare from the pg professional perspective), do a quick google search on Huguette Clark (search this blog, too!). It is a story that spanned over a century, that started in the 1800’s and ended up being one of greatest planned giving nightmares anyone could have ever dreamed up (except that it actually happened).

For those who already know the story, this week’s news about the late Ms. Clark, who lived for over 20 years at Beth Israel Medical Center in NY where I was also the planned giving director/consultant between 2004 and 2007, finally brings the story to a close.

Firstly, the criminal investigations into her attorney and accountant were finally closed!  http://www.nbcnews.com/news/investigations/no-charges-heiress-huguette-clarks-300-million-fortune-n86951

Secondly, they are finally auctioning off all of her interesting possessions  like her Stradivarius violin worth an estimated $7.5 million and a Claude Monet painting valued as high as $30 million. http://www.today.com/news/7m-violin-30m-monet-huguette-clarks-treasures-auction-1D79562788

Lastly, Bill Dedman, the investigative reporter who single handedly brought the story to the light, co-authored a very interesting book!  Not a planned giving book – which does help:  http://emptymansionsbook.com/

Now, all we have left to do is to visit Huguette’s mansion in Santa Barbara, CA, when it is finally opened to the public (hopefully someday soon).

Of course, my thoughts on this story always go back to “thinking twice” before acting – that details of your actions may be revealed someday to the public.  Think about how the NY Post would report your actions!  I suspect the Beth Israel folks, who really saved and extended Ms. Clark’s life, are still wondering if they could done things differently.  Now that Beth Israel Hospital merged into Mt. Sinai, I am sure the nightmare has already faded from the corporate conscience. But, those of us who were in the fundraising program at Beth Israel (and probably the legal staff), will never forget this one.

 

Huguette Clark’s $300 million copper fortune is divided up: Here’s the deal

Huguette Clark’s $300 million copper fortune is divided up: Here’s the deal

The final verdict on the Huguette Clark “planned giving” drama:  Her long lost relatives were ONLY out for the bucks from day one of this story and had the slimmest chances of winning.  The proof:  they accepted a paltry settlement for approximately 10% of the estate; if they had anything worthwhile, it would have been much more.  

As for my old employer – Beth Israel Medical Center – they get their $1 million bequest but could still face attacks for charitable gifts they received.  Pretty bitter sweet as their legal costs may be more than that and the institution did everything possible to ethically deal with Ms. Clark.

If you read the article, notice what the attorneys get and who pays!!!  That the is the story behind the story.  Us attorneys love estate litigation.  It just happens that it is “tax-wise” for the estate to pay everyone’s attorney fees.  Such cases would never happen if the challengers of the will had to risk actually having to pay their own attorneys.  What a sham! 

Crime Does Pay (especially when it comes to frivolous estate challenges)

Several years ago, a client came to me to help work out language to establish a restricted endowment for someone donating land to establish a camp – all nice stuff.  About year or two later, the client called and said that the donor has passed away.  The endowment agreement never was signed but the donor had done his estate plans without involvement of the charity.  The result: he left everything he had to this charitable organization, including the valuable land and more, around $15 million in total.  No strings, either!  Not that it mattered since the nonprofit knew the donor well enough to create a board restricted fund to meet the donor’s wishes posthumously.  All nice stuff until a long lost relative got notice that great uncle Charlie passed – and all of his money is going to charity, do you object?

So, the client asked me what they should do in the face of the challenge to the estate.  Apparently the donor’s attorney had done everything right, even a video of the client attesting to no undo influence and mental capacity.  Upon hearing these facts, my advice was to hire the largest, nastiest law firm in that state and instruct them to squash the other side.  Having had the misfortune of being in a small law practice and having run up against big law firms, I knew exactly the pain a large firm would put the challenging attorneys through.  Make is so not worth their time and money that they will walk away.  In any case, the charity’s bequest was completely solid – it was just a matter of time (they just didn’t want to wait years for the funds).

The client consulted with a top law firm in the state and lo and behold, they settled with the family – a few hundred thousand to send the great nephew off in style.

I found out that what would normally be considered a frivolous law suit (estate challenges only can be instituted by someone who would have received estate funds had the person died without a will – i.e. a next-in-line descendant), was actually a smart move.

For regulars to this blog, you should know my personal involvement and feelings regarding the Huguette Clark estate (search my blog for numerous posts on the topic).  So, when Bill Dedman’s email with a link to his latest piece on the Clark estate came through this morning, it wasn’t surprising.  The title says it all:  “Kin of heiress Huguette Clark in talks to receive share of $300 million estate.” Click the title if you want to see the article!

All not surprising – the whole story was a ruse from the start to squeeze some bucks out of the estate.  All of the accusations, negative stories about the estate attorney and accountant, the law suit against the hospital, all of it was for one purpose and one purpose only: how much money can we (the relatives who had nothing whatsoever to do with Ms. Clark) get out of the old lady – who to their chagrin lived to the ripe old age of 104 and only signed a will very late in the game.  Ironically and perhaps with divine justice, Ms. Clark outlived so many of the family who were to me scheming and planning and waiting to get her money (having squandered their wealth over the years).  It could have been billions of dollars, too, had her assets been managed professionally.

Here is a snip-it from the linked article that says it all:  “Fourteen of the 19 said in legal papers that they never met their reclusive aunt. The last time any of them recalled speaking with her in person was in 1957, although some said hello when their parents were on the phone with Huguette on holidays.”  I think they were stretching the truth even there.  Ms. Clark was a recluse and these “relatives” were descendants of her half-siblings (all of whom were adults when she was born) who probably didn’t appreciate their father’s new late in life family.

So what do walk away with from these stories?  The unfortunate reality is that estate challenges – from next-of-kin only – don’t follow the normal “frivolous law suit” standard that other legal cases do.  There is almost no way around it.  Planned giving fundraisers – do your best to make sure family knows what your donors are doing, keep good files and don’t be surprised when the family fights the will.  Usually it is the long lost nieces and nephews and other more distant relatives who fight the most.  No guilt about their parents, just greed and easy money.