Family battle over Warren Buffett's billionaire aide's cash
This weekend, Warren Buffett’s 40,000 faithful will gather at the Omaha Convention Center.
They’ll be there to attend Berkshire Hathaway’s annual meeting.
It is a raucous event where Buffett, 92, has been known to scoot around on a golf cart and answer questions for at least four hours with his business partner Charlie Munger, 99.
Berkshire, a conglomerate which owns everything from Geico to See’s Candies, BNSF to Dairy Queen and major stakes in CocaCola and Apple, ranks as the sixth largest company in the world.
Thousands will bathe in the wisdom of Warren, the Sage of Omaha.
“It’s amazing, very exciting, unlike any other annual meeting,” Rich Santulli, who sold NetJets to Berkshire Hathaway in 1998 and stayed on as the private flight company’s CEO until 2008, told The Post.
“[Buffett] is a brilliant guy and he understands markets like nobody else. He’ll spend four hours answering questions.”
Questions are reviewed and selected to make sure they will be of interest.
Warren Buffett will be back at Berkshire Hathaway’s annual meeting Saturday, crossing the floor where thousands of his shareholders take part in a two-day celebration dubbed the Woodstock for capitalism. REUTERS
This year there is high likelihood that none will be asked about Malcolm “Kim” Chace, despite his family being the people who gave Buffett’s company its name.
Chace died a billionaire at age 76 in 2011.
Having served on the board of directors for Berkshire Hathaway, he was loaded up with company stock and left behind a fortune.
Warren Buffett, 92, and Charlie Munger, 99, will answer pre-selected questions from shareholders, but one topic is unlikely to come up: the feud among the family that created Berkshire Hathaway.
But now his kin are in a bitter legal battle over that fortune.
On one side, his son Malcolm Chace IV, daughters Elizabeth Undell and Barbara Ulhela, their spouses and their grandchildren; on the other his second wife, his stepson and a nephew.
There are allegations of a hospital-bed change to Kim’s will, to double the annual payment to his widow and second wife Liz Chace, accusations that money from the $70 million trust was used for unauthorized purposes, and a scuffle over who will control his collection of art that is said to be worth millions.
The family feud is ongoing in Providence Superior Court, Rhode Island.
Liz Chace, Kim Chace’s widow and second wife, is now at legal war with the late billionaire’s eldest son Malcolm. She claims that his will was altered to double her annual allowance.
It has been reported it will go to trial by the end of 2023.
There are additional court proceedings in Palm Beach, Florida.
No doubt, the courtroom drama will draw attention in Rhode Island.
It is where the Chace family — whose fabric mill, called Berkshire Hathaway, created the name of Buffett’s renowned company in the mid 1960s, thanks to a series of fluke incidents — ranks among the state’s wealthiest and most influential.
“Both [Kim] and his father [Malcolm G. Chace II] were closely identified with Berkshire Hathaway for decades and decades,” Buffett told the Providence Journal following the death of Kim. “They were enormously supportive for a period of over 40-plus years.”
Malcolm “Kim” Chace made a lot of money while serving on Berkshire Hathaway’s board of directors. Trusts left to family members are now at the center of conflict.
“Kim” Chace, according to Forbes, developed his work ethic spending “absolutely terrible summers” working in the dye mill as a teenager.
But things went sideways days before his death, when he laid in his bed inside a hospital room suffering from brain cancer.
Before he passed away, a codicil was added to Kim’s will.
According to reports, it changed the annual money distributed to his soon-to-be-widowed wife Liz from $400,000 to $800,000.
Liz — well known for her philanthropy in Rhode Island — and her attorney have not commented on this, though she did tell the Providence Journal, “It’s a family issue, so it’s not so great.”
The philanthropic Liz Chace supports the Wolf School, one of her charities in Rhode Island. She and other Chace relatives are now in an ugly legal dispute.
“The circumstance of how this occurred is disgusting,” a source alleged to The Post, referring to the codicil.
Two attorneys reportedly executed the codicil — one of them is now out of the legal business and the other did not return a call from The Post.
No attorneys on either side of this high-stakes family feud spoke verbally to The Post.
“It causes tremendous concern that a codicil appeared last minute, changing the wishes of Mr. Chace days before his death,” Marianne Moran, the Palm Beach attorney representing the beneficiaries of Kim’s trust, told The Post via email.
“There is strong evidence Mr. Chace was incapacitated at the time of the alleged codicil. It is impossible for a client to have testamentary capacity to make important choices regarding their estate plan while incapacitated.”
William Saltonstall, son of Liz Chace, is named in the complaint.
Another lawsuit, aimed at Arnold “Buff” Chace and William Saltonstall has been launched by the dead man’s children and grandchildren.
Buff had been Kim’s nephew, and Saltonstall was his stepson.
They were assigned to manage Kim’s trust, seeded with more than $70 million in assets.
According to Rhode Island’s WPRI, the suit accuses Buff of investing the trust’s assets in his own real estate deals.
Arnold “Buff” Chace, a close cousin of Kim, had been put in charge of overseeing the deceased billionaire’s trust.
This raised questions from the beneficiaries.
In court documents, according to the Providence Journal, Buff and Saltonstall maintain that Kim’s son Malcolm Chase IV raised the issue as a “manufactured pretense.”
They allege it to be a move that arose out of Malcolm IV not being named trustee.
According to GoLocalProv, there are also questions in regard to who owns or controls paintings said to be worth millions of dollars — most notably a work by Edward Hopper called “Bow of a Beam Trawler.”
How the family wealth was built up is as remarkable as the contentiousness between family members.
It began in 1962, when Buffett was running a relatively small trading firm that had about $7 million to spread around.
A Berkshire Hathaway mill — photographed in the 1920s — when the company was flying high. Malcolm “Kim” Chace recalled “absolutely terrible summers” spent working in the company’s dye mill. Courtesy of Adams Historical Society
He had bought stock in a failing New England textile company called Berkshire Hathaway.
Buffett wanted out and he offered to sell his stock for $11.50.
An agreement was struck with Seabury Stanton, the president.
Buffett returned to Omaha and soon received a letter confirming the sale.
It offered to buy back the stock at a price of $11 and three eighths, one-eighth of a cent less than the agreed upon sum.
Pissed off, Buffett bought a controlling interest in the company specifically so he could fire Stanton.
Malcolm Chace IV, along with his siblings, is moving to have his cousin removed as trustee of the $70 million trust left by Malcom “Kim” Chace III.
“Buffett did it out of sheer vindictiveness,” David Kass, professor of finance at University of Maryland and a Buffett expert, told The Post. “He bought the company to get back at the guy who had been trying to cheat him.”
But there was a silver lining: he installed Chace.
As Buffett told CNBC, “I had a wonderful guy running it after Seabury Stanton, a fellow named Chace… and he was terrific.”
That Chace was Malcolm Chace II, who died in 1997.
He earned a fortune by being on Buffett’s board.
According to “All the Money in the World,” which chronicles how members of the Forbes 400 accumulated their wealth, “Malcolm G. Chace held onto his shares — making his children very wealthy.”
This weekend, Warren Buffett will be greeting his fans in Omaha. It is unlikely that Malcolm “Kim” Chace will come up in the Q&A session. AP
But not all of the wealth grew at the same pace or was handled in the same way.
“When you talk about the Chace family wealth, it is not equal,” the source said. “That is directly related to the shares and what family lines did with their shares.”
Some built more wealth “by holding onto the Berkshire shares for a good long time [as Malcolm II and Kim both did]. Others sold them quickly. There are disparities.”
Malcolm “Kim” Chace III, who took over his father’s board seat when Malcolm II retired in 1992, launched a Rhode Island bank, and wound up a billionaire whose estate would drive family members to court — considering they’re now sue each other over the spoils of his life’s work.
“To a casual observer,” said the source, “they are all wealthy. But it matters how wealthy. And that plays into what is happening with the case.”
Having no idea as to what would transpire after his death, the usually private Kim told Forbes, “I do consider myself lucky.”
Source: New York Post
