Huguette Clark, the youngest daughter of U.S. Sen. William Andrews Clark (1839-1925), a copper magnate, railroad builder, and one of the founders of Las Vegas, inherited one of the greatest fortunes amassed in the Gilded Age. When she died in 2011, at age 104, the reclusive heiress left behind more than $300 million—$25 million of which was eaten up by legal fees because of poor estate planning and an assailable will. Analyzing the facts surrounding this complex estate and the ensuing conflict reveals an array of lessons for all estate practitioners.
In 2005, at the age of 98, Huguette Clark executed a will that left $5 million of her estate to her nurse and the rest to distant relatives. Six weeks later, Clark executed a second will that excluded her relatives entirely—instead naming various beneficiaries, including her nurse, lawyer, and accountant. The second will also established the Bellosguardo Foundation, a philanthropic organization to support the arts. The foundation was named for Clark’s $85 million dollar oceanfront mansion in Santa Barbara, which the foundation was to receive.
Several red-flags existed in the execution of the plan:
- Huguette, who had already been living in a hospital for 14 years at her insistence, was known to spend her days watching cartoons and playing with her doll collection—which was worth more than a million dollars.
- The lawyer who drafted her will and the accountant who assisted the lawyer were named as beneficiaries, set to collect $500,000 each. Both were also appointed as executors of the estate and trustees of the Bellosoguardo Foundation—positions which would entitle them to collect significant fiduciaries fees.
- Clark’s nurse, doctor, and the hospital where she resided were all named as beneficiaries.
- Clark’s nurse, Hadassah Peri (also a beneficiary), reportedly assisted Clark in executing the will.
The Will Contest
Not surprisingly, after Clark’s death, 19 of her relatives instituted a will contest claiming that Clark lacked capacity and was subjected to undue influence when she executed the will that excluded them. The facts and circumstances of the case cast suspicion on the people who Clark depended on most. What actually transpired in the six weeks between the execution of first will and the second that changed her decision to leave the bulk of her estate to family? Was she subjected to undue influence from multiple sources, including from her own attorney and accountant? Did she have testamentary capacity?
The New York District Attorney opened an investigation focusing on Clark’s lawyer and accountant, who had no documentation to prove that Clark understood that they were included as beneficiaries under the plan nor that they were to receive lucrative fiduciary fees. It came to light that they had not filed gift tax returns for Clark for seven years, accruing millions in interest and penalties owed to the IRS, but no criminal charges were ever filed against them.
Opinions of Clark’s lucidity were remarkably consistent between witnesses. Six months after signing the will that excluded her relatives, a neurologist visited Clark and described her as alert and cheerful. Clark also had a history of showing considerable generosity to those in proximity to her—selling prized musical instruments and other property to gift large sums of money. Both her lawyer and accountant had received large gifts in the past, as had her best friend. It was reported that she even gave $25,000 to the hospital workers who fixed her television and brought her glasses of warm milk in the morning.
In 2013, on the eve of trial, the New York attorney general brokered a settlement under which $34.5 million was divided among the relatives excluded under Clark’s second will. An arts foundation was established to oversee the Bellosguardo mansion. Peri, Clark’s nurse who was in line to receive $30 million, received nothing and agreed to return to the estate $5 million in lifetime gifts. Clark’s lawyer and accountant forfeited their $500,000 bequests and also lost their fiduciary appointments. Beth Israel Medical Center in New York City received its bequest of $1 million, but Clark’s family, the foundation, and the Corcoran Gallery of Art in Washington, D.C., a favorite museum of the Clark family to which Huguette left a Monet painting from the "Water Lillies" series, were permitted to sue the hospital in an attempt to recover more money. The doll collection went to the arts foundation. A portion of the estate was used to cover legal expenses incurred by certain parties.
Key Points Gleaned from the Clark Case
Undue influence is no laughing matter. With a rapidly increasing baby boomer population, we can expect to see more will contests and elder abuse cases involving undue influence.
The best way to avoid allegations of undue influence is to limit communications about the will and the estate plan to the scrivener and the testator. No person other than the scrivener and the testator should be present during the will’s execution.
A good scrivener will also evaluate the facts and circumstances existing when the testator seeks to prepare or change a will and the underlying reasons behind the change. Frequent changes and unexplained substantial changes in the estate plan are a red flag, as are changes which benefit those in whom the testator relies or confides. A good scrivener will always ask sufficient questions and gather enough information to determine whether undue influence could be a concern and will not take action if there is such a concern.
An attorney who inherits under a will should not draft it and should not be involved in the planning conversations. Attorneys are bound by the rules of professional responsibility which strictly control these issues. These same rules also generally require that if the attorney/scrivener is named as a fiduciary under the will, such as an executor or trustee, the attorney/scrivener must disclose to the client that the attorney will receive a fiduciary fee for his or her service as a fiduciary.
Testamentary capacity should always be tested before the testator executes a will. This does not mean that the testator must undergo a medical evaluation. An attorney/scrivener has the ability to ascertain testamentary capacity in most states; however, depending upon the facts and circumstances leading up to the execution—particularly where the scrivener has reason to believe it is an issue, a more detailed and in-depth test of capacity may be necessary prior to execution.