Logic or Law?

“Wills ... are not written in stone—for all their granite legal language—and they can be bent...”
Janet Malcolm, writer for The New Yorker
Fall 2024
Crying child
Some disappointed children sue their parents or their parents’ estates. Others simply wail.

A generous grandfather, a simple will, a passel of smart lawyers, and a commitment to straight talk with the family about money. What could possibly go wrong?

Just about everything, as it turns out.

More than a decade before he died in 2019, Barron Hilton, the billionaire hotelier, informed his family that he intended to leave almost all his money to a family foundation, effectively disinheriting his children and grandchildren. He was said to be embarrassed by the antics of his granddaughters, Paris and Nicky. Inherited wealth, he believed, was a corrupting burden.

Hilton was a careful man who took every precaution to craft an impregnable fortress of an estate plan. And yet, despite all his efforts, he failed. He wanted most of his money to go to charity. Instead, it became carrion for the IRS. He wanted privacy. His heirs squabbled publicly, providing fodder for the tabloids. Far from being settled quietly, his estate has been locked in a costly court battle for years.

The Hilton saga has become a cautionary tale for anyone who believes that settling an estate involving great wealth and a large family should be a straightforward undertaking.

Logically, Hilton believed he could leave his wealth, unchallenged, to whomever he chose. At first, he had planned to leave his fortune to his family but changed his mind: 97% of his wealth would go to charity and the remaining 3% would be divided amongst his eight children and 15 grandchildren.

Logically, Barron Hilton expected a tax deduction which would eliminate all estate taxes preserving his fortune for, as he put it, “noble causes.” Catholic nuns were among those causes as were the poor and the homeless.

Sorry, Barron Hilton. Logic and the law aren’t necessarily comfortable bedfellows.

Hilton died at home in 2019. Almost immediately, the vultures began to circle. A group of heirs sued to block his estate plan. Then, the IRS disallowed his $3 billion charitable deduction and sent his estate a bill for $1.1 billion. The agency’s reasoning: his estate wasn’t entitled to a charitable deduction because his children might prevail in court. If the courts ruled in favor of the heirs, the nuns likely would have to get in line behind them.

After years of litigation, this saga may end soon. The court is expected to hand down a decision within a few months. Will it honor Barron Hilton’s wishes? Hilton and his lawyers had foreseen the battles that might erupt after his death, and they devised a plan to withstand the assault of litigation. Logic may indeed win out over greed but only because of a bulletproof estate plan.

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