Paris Hilton loses 97% of inheritance

[Meadbh]

We have had a recent discussion on how to deal with succession planning with ne'er do well offspring:

http://www.early-retirement.org/foru...tml#post593885

Now it seems Barron Hilton has written a will that designates 97% of his fortune to a charitable trust, leaving "poor" Paris "poor":

Paris loses out: Hilton fortune pledged to charity | U.S. | Reuters

Only thing is......3% of $2.3 billion is $69 million.
Wonder how long it will take Paris to spend that down?

[Niko]

Quote:

Originally Posted by Meadbh Only thing is......3% of $2.3 billion is $69 million. Wonder how long it will take Paris to spend that down?

About 4 days -- unless, of course, she goes back to jail. I'd guess it's tough to spend too much while in jail.

[Cattusbabe]

Don't cry for Paris. Dollars to donuts she got her "inheritance" before her grandfather's death. Isn't that what the financial planners tell you to do to avoid the estate tax? That what I would have done.

[Meadbh]

Are you now Dita von Teese?

[Cattusbabe]

No. Still Betty. Just changed outfits.

[ERD50]

Quote:

Originally Posted by Meadbh Only thing is......3% of $2.3 billion is $69 million. Wonder how long it will take Paris to spend that down?

Yep. And some people justify the current Estate Tax as a way to prevent these 'Paris' situations. But, even a 97% Estate tax rate doesn't accomplish that.

-ERD50

[aaronc879]

Don't forget Paris has a little sister. That means poor Paris will have to get by on 35MM.

[Gumby]

Paris doesn't need the inheritance. She has marketable skills.

[aenlighten]

will be administering that charity? Course, she might actually have to put in an appearance to 'earn' it.

[Martha]

Quote:

Originally Posted by ERD50 Yep. And some people justify the current Estate Tax as a way to prevent these 'Paris' situations. But, even a 97% Estate tax rate doesn't accomplish that. -ERD50

The Hiltons don't avoid estate tax by predeath gifts to Paris et al. The 97% of the 2.3 billion won't be taxed because it is all going to a charitable foundation.

You can give you money to charity and save estate tax too. Everyone is free to give to charity and it is something to be encouraged, not discouraged. Wonder if there would be a Conrad Hilton Charitable Foundation if there wasn't an estate tax?

[W2R]

Quote:

Originally Posted by Gumby Paris doesn't need the inheritance. She has marketable skills.

Exactly. She has created the "spoiled rich kid" persona that the public wants to see, and she is making plenty of money on her own. She pointed out in an interview that she really doesn't need a larger inheritance.

I might be wrong, but I wouldn't be at all surprised to find out that the real Paris bears no resemblance to her "spoiled brat" image. That image has resulted in a nice income for her, though, independent of her father's wealth. Good for her.

[saluki9]

Paris Hilton get's a $250K appearance fee for SHOWING UP to a private party. That is on top of her travel expenses.

I think she will be fine without the inheritance.

[ERD50]

Quote:

Originally Posted by Martha The Hiltons don't avoid estate tax by predeath gifts to Paris et al. The 97% of the 2.3 billion won't be taxed because it is all going to a charitable foundation. You can give you money to charity and save estate tax too. Everyone is free to give to charity and it is something to be encouraged, not discouraged. Wonder if there would be a Conrad Hilton Charitable Foundation if there wasn't an estate tax?

Two separate issues.

The point is that an Estate Tax at XX% does not eliminate these 'Paris' issues, as so many like to believe. In this case 97% was not passed to Paris (whether it goes to charity, or to the govt is irrelevant) - and she still will have enough $$ that it does not change any 'lucky by birth' issues.

So yes, one can 'avoid' paying Estate Taxes by giving to charity, but that also means less to the heirs. In fact, (outside of other planning strategies), the less you give to charity, the more you can leave your heirs. The gov't is only 'taking' 55% (or so), leaving 45% for the heirs - but the charity 'gets' 100%, leaving nothing for the heirs (above the exclusions).

I suspect that there is a Conrad Hilton Charitable Foundation for at least two reasons:

1) Ego - When you give it to the govt - they don't attach your name to it when it is spent.

2) Control - when you give it to the govt, you have no say at all in how it is spent. A sub-set of that is that you can name your heirs as administrators of the charity.

-ERD50

[bbbamI]

Quote:

Originally Posted by saluki9 Paris Hilton get's a $250K appearance fee for SHOWING UP to a private party. That is on top of her travel expenses. I think she will be fine without the inheritance.

Speaking of parties....we got an e-mail from the Luxor Hotel and Casino (that's where we stay when we're in Vegas) and they announced Paris and her sister will be at their nightclub New Year's Eve night.

The price to squeeze in the door is $250 per person. Of course you can get a table for 4...$2500 (that was sold out) and the cost went all the way up to $20K for 30 of your closest friends, an open bar and security guard.

Hubby kept asking, "is she going to do anything?"

Poor hubby.

[Meadbh]

Quote:

Originally Posted by ERD50 I suspect that there is a Conrad Hilton Charitable Foundation for at least two reasons: 1) Ego - When you give it to the govt - they don't attach your name to it when it is spent. 2) Control - when you give it to the govt, you have no say at all in how it is spent. A sub-set of that is that you can name your heirs as administrators of the charity. -ERD50

Third reason: tax incentives. As an indicator of how this affects philanthropy, compare the US and Canada. Until recently, Canadian philanthropists had no option but to donate income. Now there is no capital gains tax to pay on donated stocks and there is competitive donation - which certainly contributes to society.

"Nationally, gifts of stock to Canadian charities, negligible before 1997, total $3-billion in the past decade."

globeandmail.com: Don Johnson

[MooreBonds]

An interesting snibit from the article:

"Conrad Hilton established the foundation in 1944 and when he died in 1979 left virtually all of his fortune -- including, according to media reports at the time, a 27 percent controlling stake in Hilton Hotels -- to the charity. But Barron Hilton challenged the will and after a nearly decade-long legal struggle reached an out-of-court settlement to split ownership of the shares with the foundation in 1988, The New York Times reported."

Paris loses out: Hilton fortune pledged to charity | U.S. | Reuters



I'm sure that when Barron kicks the bucket, Paris will take his lead and similarly contest the will...

[ERD50]

Quote:

Originally Posted by Meadbh Third reason: tax incentives.

That's easy to say - but could you explain how?

Here's the rub - yes, having an Estate Tax with a charity exclusion does encourage some people to decide to give some of their estate to charity. But with that option in place, they don't 'save' anything by giving to charity. As I said above, if they want to 'save' money - pay the tax. You get to keep ~ 45% of it. Everything you give to charity, 100% is ... gone.

There is no incentive to give to charity to somehow pass more to your heirs - it just does not seem to work that way.

But some people decide that they would rather give $X to charity and have some control and a legacy (how many time have I heard ' The John D. and Catherine T. MacArthur Foundation' on NPR?) rather than give it to the govt. Even if it means leaving less to their heirs. I think that may be a reflection on how people who accumulate wealth view the govt's (lack of) fiscal responsibility.

So, given that there is an Estate Tax with a charity exclusion, I would say that the decision to actually give some of the estate to charity is driven by ego - not to 'save' money. Right?

Seems to me if the govt really wants to encourage charitable giving, allow a tax credit for it, rather than a deduction. Instead of some % of that 1.5% in Estate Tax revenue being directed to Charity when someone dies, we could be encouraging everyone to give more while they are alive.

-ERD50