Why Did It Take 34 Years to Settle the Howard Hughes Estate?
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Why Did It Take 34 Years to Settle the Howard Hughes Estate?

What is the importance of a Last Will and Testament? How do I avoid issues during the probate process? This article explains Howard Hughes's Estate and how his situation is a good reminder to create a Will. Keep reading to learn more!

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Howard Hughes (1905-1976) was an American businessman, investor, aviator, and filmmaker. Hughes was primarily known for three things:  his incredible influence on the aviation industry, his wealth, and his penchant for being a recluse. Hughes’ extraordinary life led to an extraordinary fight over his estate - one that lasted for 34 years.

The Life of Howard Hughes

Hughes' early business ventures included a tool company and a movie production company, but he made the bulk of his fortune through his ownership and management of several airlines, including Trans World Airline (TWA). Hughes invested his money in many other industries, including real estate, oil drilling, and hotels. 

Hughes' business legacy is in the field of aviation. He set several aviation records, such as breaking the airspeed record in 1935 with his H-1 Racer at a speed of 352 mph. This was faster than any other aircraft at the time. In 1938, Hughes completed a record-breaking around-the-world flight in three days, 19 hours, and 14 minutes. His transatlantic flight from Los Angeles to Newark in just seven hours, 28 minutes showed the public what commercial airlines were capable of.

Hughes later founded the Howard Hughes Medical Institute in Miami, which became one of the world’s leading biological and medical research facilities. Hughes was always reclusive, but in 1950 he went into total seclusion. He lost control of TWA when he became embroiled in a lawsuit over antitrust allegations with other TWA owners. He sold his shares in the company for over $500 million in 1966. At the time of his death, Hughes owned several valuable pieces of undeveloped land around Las Vegas, which could’ve been worth close to a billion dollars.

Hughes was married twice but wasn’t married when he died in 1976. He also didn’t have any children. That meant his estate would have to be divided up among his other relatives in accordance with his will and trusts. There was just one problem… no one could find his will!

Hughes Didn’t Have a Will… Or Did He?

It took years to determine if Hughes actually had a formal will. 

One of Hughes’ lawyers, Greg Bautzer said that in all the years he worked for Hughes, he was never asked to draft a will. But he also believed that Hughes was a smart man who probably left a handwritten will somewhere.  George Francom, one of Hughes’ personal aides, testified that Hughes told him he made a handwritten will. However, he never told Francom where it was.  A lawyer found a letter from Hughes to a bank in 1938 stating that a will was enclosed, but the will that would’ve been inside the envelope wasn’t found. The search also turned up a 1939 codicil, but no will was attached to it, so it couldn’t be accepted by a court of law.  

Lawyers who worked for Hughes’ company did a worldwide search for a will and went through all of his belongings in six states. They found an unsigned carbon copy of a 1954 will, indicating he wanted money left to the Hughes Medical Institute. But the carbon copy was not the same thing as an original, provable will. 

At one point a will was found at The Church of Jesus Christ of Latter-day Saints in Salt Lake City. The document said that Hughes wanted his estate to be divided into 16 equal shares, with one share going to the Mormon Church and $156 million to the man who mysteriously produced the will, Melvin Dummar.  It had many spelling errors and left money to both of his ex-wives, which did not make sense because he had settled with the ex-wives years before his death.

Dummar told a tall tale about driving through the Nevada desert in December 1958 when he ran into a disheveled drifter who needed a ride to Las Vegas. Dummar gave him a ride and discovered that the man was allegedly Howard Hughes. Initially, Dummar denied having anything to do with the will, but his fingerprint was discovered on the envelope. The people who stood to inherit under Hughes’ will - several cousins - called BS on this story and took Dummar to court, where the will was declared a forgery.

Enter the Wives and Children

A court eventually determined that Hughes died intestate, which means dying without a will. Without a widow or children, the court needed to identify which cousins were his heirs. But this took years because over 1,000 people came forward to claim that they were related to Hughes. 

For example, a former Hollywood actress named Terry Moore said she married Hughes on a boat in international waters in 1949. The records of the marriage were thrown overboard in order to protect her reputation. Allegedly. The court dismissed her claim.

A woman calling herself Alyce Hovsepian Hughes, from Atlantic City, claimed that she was actually Jean Peters, an actress who was Hughes’ second wife. Hughes divorced Peters in 1971. But Alyce wasn’t really Peters and her claim was tossed by a judge.

Then there was “Alma Hughes”. She said Hughes fathered her child, who was born in 1954 and tragically died in 1965. Alma claimed that Hughes married her in 1973 after she agreed to be artificially inseminated with his child. At age 64, she gave birth to the child and gave it up for adoption. Allegedly.  The court threw out her claim, too.

Many fake children also showed up to test their claims. Donald E. McDonald changed his name to Richard Robard Hughes and claimed Hughes adopted him in 1953 when McDonald was already an adult. Claire Benedict Hudenburg was a clairvoyant who claimed to be Hughes' illegitimate daughter who in past lives had been a king. She claimed that she once lived next door to Hughes and someone put arsenic in her swimming pool and cyanide on her roof. A judge dismissed their claims and those of every other person claiming to be Hughes’ children.

Final Settlement of the Hughes Estate 

Eventually, the state of Texas had to split up about $2.5 billion between 22 of Hughes’ legal cousins in 1983. But every time someone claimed to be an heir, there was a lawsuit or a settlement, dragging the process out for years. After years of litigation, a significant sum wound up going to the Howard Hughes Medical Institute. Overall, about 200 hundred distant cousins inherited money from the will.

California and Texas went to war over who would get the Hughes estate taxes. Since Hughes lived in the state from 1926 to 1966 and owned land there, the state wanted to tax the estate. California had a 24% inheritance tax. Texas had its own claim on the Hughes estate because he was born and raised there. Texas’ estate tax was 18%. Unsurprisingly, Hughes’ heirs claimed that Hughes was a legal resident of Nevada, which had no inheritance tax. California and Texas eventually reached a settlement.

The final piece of the estate wasn’t settled until 2010.  A shopping-mall company called General Growth Properties purchased some of the Hughes undeveloped land in 1996. The final payment wasn’t due until 2009, but during that time there was a boom and bust in Las Vegas land prices. General Growth wound up in bankruptcy but agreed to pay the Hughes heirs $230 million for their remaining interest in a huge development called Summerlin.

Avoid the Hughes Mistakes by Making a Will

Hughes made so many mistakes in his estate plan and none was bigger than not leaving a written will with his lawyer.

  • Distant Relatives Hughes Never Met Got Rich: Hughes is a prime example of how dying intestate is a disaster. He said several times that he didn’t want his distant family inheriting anything and yet cousins all over the United States wound up rich because of his estate. There were years of court hearings to determine how many cousins he had on his paternal and maternal sides of the family and which ones were entitled to inherit.

  • Lawyers Got Really Rich: At least 200 lawyers worked on the Hughes cases trying to figure out how to distribute his billions of dollars. That doesn’t even count the lawyers for all of the people who were his heirs - they also wound up being paid with estate money. This means millions of dollars of the estate went to lawyers.

  • The Tax Man Took Hundreds of Millions: Hughes’ failure to plan also cost his estate hundreds of millions of dollars in state and federal taxes. The IRS contended that Hughes improperly deferred taxes on income from sales of residential lots at Summerlin. In 2012, the IRS hit Hughes’ company with a $144.1 million tax bill. 

There is one clear lesson here and that is you must have a last will and testament. Even if you are private, like Hughes, you should make a FastWill and then tell one trusted person of your intentions. If Hughes had done this, his estate would have saved hundreds of millions of dollars.

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