Friday, October 7, 2011

Judge Fires Herbalife Heir's Custodian

Judge Fires Herbalife Heir's Custodian

On Point Legal News/November 13, 2006

By Matthew Heller

Finding several violations of probate law, a Los Angeles judge has ruled the grandfather of 14-year-old Herbalife heir Alex Hughes ought to be removed as custodian of the $40 million bequest in the boy's father.

The bequest, initially composed of 2 million Herbalife shares, is area of the fortune of Herbalife founder Mark Hughes, that is now worth a lot more than $400 million. His boy Alex will inherit the majority of it when he turns 35.

Mark Hughes, who died in 2000, put the majority of his assets inside a trust and hired his father Jack Reynolds and 2 Herbalife professionals -- Conrad Lee Klein and Christopher Pair -- to manage it.

Alex's mother, Suzan Hughes, has accused the trustees of mismanagement in a variety of probate court proceedings that certain attorney has known as the legal same as “World War III.” The trustees have stated “enormous success” in controlling the estate.

However in a current decision, Superior Court Judge Paul Gutman on the sides with Suzan Hughes and granted her petition to get rid of Reynolds from supervision from the $40 million custodial account.

“[T]he custodian, Jack Reynolds, getting unsuccessful to adhere to the needs of [California] Probate Code section 3912 ... the court expects to order he be suspended as custodian,” he authored.

Section 3912 requires, amongst other things, that the custodian “take control of” and “hold” custodial property. However in This summer 2005, Reynolds decided to convert the bequest right into a minority curiosity about a good investment partnership controlled through the trust and handled by Klein.

That agreement, Gutman found, “effectively cedes charge of the custodial property” to Klein and also the Hughes Investment Partnership (Stylish) as well as violated the Probate Code by commingling the custodianship assets, “the sole property of Alex,” with individuals from the partnership.

The judge stated he expects to order Alex's attorney to appoint three candidates to exchange Reynolds as custodian.

After a trader group acquired Herbalife in 2002, Stylish distributed $1.95 million in cash to Reynolds for that shares Mark Hughes had left him. “Only the custodianship for Alex was missing out on its distribution,” Gutman noted.

Individually, Suzan Hughes has become a huge hit the dismissal of her sexual harassment lawsuit against trustee Pair.

1 comment:

  1. Probably not. You shouldn't transfer significant assets to a custodial account if you think the child may need to apply for financial aid. Assets held in a child's name, as in a custodial account, weigh more heavily against financial aid eligibility than do the parents' assets or assets held in a 529 account or an education savings account (ESA). In addition, a custodial account doesn't have the same tax advantages as a 529 or an ESA. Finally, 529s and ESAs offer parents more control, including the ability to change the account beneficiary. See more here: custodial accounts age of majority by state .

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