By Doreen Carvajal and Graham Bowley
PARIS — In 2001, when Daniel Wildenstein lapsed into a coma here just days before his death at 84, French authorities say, his two sons and a team of financial advisers began quickly reshuffling the holdings of this wealthy patriarch who had led one of the greatest art dealing-dynasties of the 20th century.
Almost $250 million worth of art was shipped from family vaults in New York to tax havens in Switzerland, the French government’s criminal investigators say in a report; even the ownership of his prized thoroughbred horses was abruptly transferred to a newly formed family company while he lingered unconscious in a hospital bed.
The secret effort was part of a gigantic undertaking, the French authorities say, to avoid an estate tax bill in France and potentially in the United States. The French government has calculated that the estate could owe, with fines and interest, at least 550 million euros, or roughly $600 million, in France alone. Next month, several family members are scheduled to go on trial here on tax fraud and money-laundering charges. The primary targets are Daniel Wildenstein’s son, Guy, 70, who is the president of Wildenstein & Company, based in New York; his entourage of Swiss and French financial advisers; and offshore private banks. (Daniel Wildenstein’s other son, Alec, died in 2008.) Tax fraud carries a maximum prison sentence of seven years, and possibly other fines.
Comment by Rose Law Group estate planning attorney Tim Heileman:
“The legality or illegality of actions taken for the purpose of lessening one’s tax burdens from a state or federal perspective, depends on a vastly wide array of variables and facts. Estate planning in the United States provides numerous legal avenues for lessening one’s tax burden, such as irrevocable and charitable trusts and other gifting mechanisms, however, strict requirements and protocols must be followed to ensure compliance and the avoidance of any wrong doing. The realm of international estate planning and asset protection is an even more complex arena, as in recent years the United States as well as other nations, have taken steps to close various loopholes which previously allowed the rich and exceptionally wealthy to shirk their state and federal tax obligations.
Perhaps the biggest issue in this scenario is the fact that these assets were not transferred pursuant to a thoughtful and well-structured estate planning, but instead were wildly and suddenly transferred abroad, only after Mr. Wildenstein fell into a fatal coma. In this scenario it’s easy to see why the authorities view their actions as a blatant attempt to defraud the government versus transfers taken pursuant to a legal estate plan. Either way it’s a case to watch as the outcome may have an enormous impact on the future of estate planning and asset protection for the wealthy.”