September 13, 2005

A nasty little war...

...is being fought over a 13 year old boy. From Yahoo/LA Times:
A boy and his $400 million
His name is Alex. He is 13 years old. And when he reaches 35, he stands to inherit an estate now valued at about $400 million.

This L.A. golden child is the only son of Mark Hughes, the late founder of Herbalife International, a maker of nutritional supplements.

Hughes' death at age 44 on May 21, 2000, made Alex the sole beneficiary of a vast trust. The multimillionaire died of a lethal combination of alcohol and an antidepressant after a drinking binge. The death was deemed accidental.

But Alexander Reynolds Hughes is now at the center of a lengthy and contentious probate battle in Los Angeles County Superior Court pitting his mother, Suzan Hughes, a former actress, court reporter and Miss Petite U.S.A., against trustees of the Hughes Family Trust. Mark and Suzan Hughes divorced two years before his death, in 1998, after nearly a decade of marriage. She was the third of his four wives.

Suzan Hughes wants the court to oust the trustees, who include Alex's paternal grandfather. She previously tried — and failed — to persuade the courts to remove the trustees on grounds of violating their fiduciary duties. Now, she has filed another petition seeking their removal on other grounds.

Hillel Chodos, her attorney, claims the trustees have paid themselves millions in fees while ignoring Alex's needs.

"Basically, they got the gold mine and [Alex] got the shaft," Chodos said. "They have paid themselves at least $5 million in trustee fees to date — maybe more. They paid their lawyers and accountants maybe $12 million to $15 million."

But attorneys for the trust have fired back in court papers, accusing Suzan Hughes of waging a "personal vendetta" against the administrators of the Hughes trust. They describe the case as "one of the most contentious trust and estate proceedings on record."
The terms of the trust:
The trustees include Alex's paternal grandfather, Jack Reynolds, former Herbalife chief executive Christopher Pair, who was a longtime friend of Mark Hughes, and Conrad Lee Klein, an attorney who was Mark Hughes' personal counsel for almost 20 years. Klein is the husband of California Appeals Court justice Joan Dempsey Klein and served for many years as an executive officer of Herbalife. (None of the parties, including Alex and his mother, retained financial ties to Herbalife after its sale.)

Under terms of the trust, Alex will receive one-third of the trust's annual income — or about $1 million judging by today's value — along with an additional $35 million from a separate custodial account, when he reaches age 25. At age 30, he could expect to receive about $2 million annually. Then, at 35, he will receive whatever remains in the trust, Ziskin said.
And of course, Ms. Hughes is not well off -- no, not at all:
Under her divorce settlement, Suzan Hughes receives $10,000 a month in direct child support and the trust pays approximately $100,000 for property taxes and insurance on her home, for Alex's tuition at the Windward School in West L.A., and for his medical expenses and medical insurance.

Court papers filed on Suzan Hughes' behalf state that "child support did not take into account the lavish lifestyle that was provided to Alex by his father when Mark was alive and had custody of Alex. This lifestyle included vacationing with Mark at his lavish beach home, cruising on Mark's yacht, driving in Mark's fleet of luxury cars and attending events of extraordinary prestige, lavishness and extravagance."

She has asked the trust to reimburse her for Alex's expenses and to make annual payments of $877,000 in after-tax dollars "so that Alex may continue to live the lifestyle he enjoyed while his father was alive." Chodos said Alex's expenses include legal fees, charitable giving and accounting advice.

The trust's attorneys believe that Alex's mother has waged her legal fight for two reasons: her attempt with other bidders to acquire Herbalife after her ex-husband's death was rejected by the trustees, and, she may believe that her divorce settlement was "insubstantial" when compared to the payout received by Mark Hughes' fourth and final wife, Darcy LaPier Hughes. The former Hawaiian Tropic model, who married Hughes on Valentine's Day 1999 after previous marriages to Hollywood action star Jean-Claude Van Damme and Hawaiian Tropic founder Ron Rice, reportedly received a $34-million settlement.

But attorneys for the trust estimate Suzan Hughes' net worth in excess of $10 million, with a yearly income of more than $600,000.

Yet, they assert in court documents, "her wealth apparently falls short of what she believes she is entitled to."
What a hypocrite -- it is what Alex wants... Google her name and she comes up as an "actress and philanthropist" and she is starting her own reality TV show. Posted by DaveH at September 13, 2005 2:13 PM