The Estate of Howard Hughes

If you want to create a valid will, there’s five things you have got to do. You must put it in writing, you must sign it, you must intend that it be your will, you must be at least 18 and of sound mind, and you need two witnesses. Some states differ on the two witnesses part, and might only require one witness or zero witnesses if the will is signed by a notary, but this is the broad-based rule.

This is also one area where the law is pretty strict–a failure to put a will in writing, intend that a document be your will, have the right intent, or sign it–means that in almost all cases your will shall be given no effect. The safety valve is that every state has an intestacy statute that apportions property pretty closely to what people would ordinarily want.

If you survive your spouse, don’t remarry, and have two kids, it doesn’t matter what state you’re in, those two kids are each going to get half of your assets. And that’s pretty close to what most people would do in that situation if they did draw up a will.

The estate administration shenanigans happen when you don’t have anything resembling a traditional family, you leave behind a series of conflicting instructions, or you don’t have the objective of leaving behind your assets in the legally expected way but you fail to validly create an alternative.

One of the high-stakes cases involving an invalidly created will came in 1976 upon the death of Howard Hughes. He may have had an idiosyncracy or two (or fifty), but Howard Hughes knew a thing or two about cash-generating assets and had built up a highly liquid fortune of approximately $500-$600 million after the sale of his roughly ⅓ common share stake in TWA. And to get a feel for how fashionable conglomerates were back in the 1960s, remember that TWA wasn’t just the airline but also owned Hilton Hotels and the real estate subsidiary that is now Century 21.

His additional holdings, some of which were purchased with the proceeds from his TWA sale, included almost 30 different companies ( which included 7 casinos, 3 aircraft makers, 1 helicopter maker, 1 TV station, 1 airline, 1 airport, 4 mining companies) and millions of dollars in unredeemed casino chips.

In 1925, he had typewritten a will that would donate all of his wealth to medical research. However, it was unsigned, and therefore invalid.

It took almost a decade to settle the dispute, as Hughes’ estate came to include over 1,000 different claimants and a total divestment of almost $2 billion (even though the lawyer and court costs were high, totaling over $30 million, the contested estate got to compound for over a decade while the estate was sorted out).

To get an idea of how an estate can take over a decade to settle, consider this passage from the September 5th, 1981 edition of the Washington Post:

“The mother of Howard Hughes was Allene Gano Hughes. The daughter of a prominent Dallas judge, she was the embodiment of charm and refinement. She died in 1922 at age 39 from complications after minor surgery.

The woman before Judge Gregory almost 60 years later was in her early 60s. The left side of her curly hair was blond, the right side black, apparently a combination of two different wigs. On top sat a straw hat festooned with multicolored feathers. Her silver blouse bore a large Confederate flag on the back. Over that she wore a gold lame jacket, which was split down the back to reveal the flag. She had on tan silk culottes along with sandals, but no hose. One pair of glasses perched on her nose and a larger pair of sunglasses covered those; another pair was stuck on the brim of her hat. She was weighed down with necklaces, bracelets, charms and assorted turquoise jewelry, and large, long looped rings dangled from her ears. A camera hung from her neck. She claimed she had dated presidents Eisenhower and Kennedy and had been caught by her husband in bed with Elvis Presley. She said she is the mother of Howard Hughes, come to claim her rightful inheritance.

She was not alone. More than 600 alleged wives, sons, daughters, first, second, third, fourth and fifth cousins lined up in Gregory’s small courtroom on the fifth floor of the family law center on the north edge of downtown Houston with their hands out, trying to claim a share of the Hughes fortune. And those were just the ones who showed up in person or sent a lawyer. Gregory held his hands about two feet apart to indicate the size of the stack of letters he received from others claiming to be Hughes long-lost relatives.”

When it was all said and done, 21 cousins and an aunt ended up receiving a share of the Hughes fortune. The irony of the matter is that Howard Hughes absolutely hated lawyers, and his failure to sign his will in accordance with the common law enabled the legal industry to collect tens of millions of dollars to aid in the determination of his heirs.