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A deal has been reached to divide up the $300 million estate of the reclusive heiress Huguette Clark, a shy artist who lived her last 20 years in New York hospitals while her palatial homes sat empty.
The settlement was signed in the middle of the night and delivered to the judge in Surrogate Court Tuesday morning, when jury selection in a trial over Clark's will had been scheduled to resume. Surrogate Judge Nora S. Anderson accepted the deal, effectively ending the trial before it began. But the deal drew an appeal from one group that was cut out of the negotiations, meaning it could have to be redrawn.
The deal gives $34.5 million to Clark's relatives, although her will stated emphatically that they should receive nothing. These relatives are the great-grandchildren and great-great-grandchildren of Huguette's father from his first marriage. Her father—he copper miner and former U.S. senator from Montana, W.A. Clark, who is also known as the founder of Las Vegas—left equal shares of his fortune to all of his surviving children: Huguette and four of her half-siblings.
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After Huguette Clark died in 2011 at age 104, 19 relatives challenged her will, claiming she was mentally ill and had been defrauded by her nurse, attorney and accountant. No one was charged with any crime after an investigation by the district attorney's office, but enough questions were raised that the case is being settled before the jury trial, which could have lasted six to eight weeks. The relatives, who last saw her in 1957 and most of whom never met Clark, will take home the full $34.5 million, as the estate will pay the relatives' taxes and $11.5 million in legal fees. Altogether, about $25 million in legal fees are included in the settlement.
The settlement sets up an arts foundation controlling the Clark family's $85 million California summer home at Santa Barbara. That charity is the largest beneficiary of the will, as Clark directed, but with a twist: In the settlement, the foundation isn't set up in California but in New York, with the New York attorney general forming the first board of directors. Seats are reserved for the Santa Barbara community and Clark relatives also get a seat.
The big loser in the settlement is Clark's nurse and companion, Hadassah Peri, who was the daytime private-duty registered nurse for 20 years while Clark lived in Doctors Hospital and then Beth Israel Medical Center. Peri had received $31 million in gifts while Clark lived, and was in line for a share of the will, approximately $30 million before taxes. (Read the will).
But under the settlement the nurse receives nothing from the will and has to pay back $5 million to Clark's estate. The advantage for the nurse is that the settlement stops attempts to recover even more of the gifts. The attorney general's office took the position that gifts to a caregiver were excessive and presumed to be the product of undue influence. Peri, 63, an immigrant from the Philippines, worked 12 hours a day, seven days a week, for many years, before moving to eight-hour days. She was paid $131,000 a year. Her attorney will receive $1.5 million in fees.
More from NBC News:
Deal in Huguette Clark estate: Charity, relatives, lawyers win
Huguette Clark's $60-million nurse: 'I give my life to Madame'
How doctors sought gifts from little old lady in hospital
Huguette (pronounced "oo-GET") Marcelle Clark was the youngest child of former U.S. Sen. William Andrews Clark (1839-1925), one of the copper kings of Montana, a railroad builder and one of the richest men of the Gilded Age. Huguette, born in Paris in 1906, was a shy painter and doll collector who spent her last 20 years living in simple hospital rooms. She attracted the attention of NBC News in 2009 because her fabulous homes in Connecticut, California and New York sat unoccupied but carefully maintained.
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The settlement was shepherded by the office of New York Attorney General Eric Schneiderman. The attorney general's spokesperson would not comment. The head of the attorney general's charities bureau, Jason Lilien, has told parties in the case that his office was working aggressively to protect the charitable interests. That office made sure that the beneficiaries in confidential relationships with Clark—her nurse, attorney and account—received nothing.
Which Bellosguardo Foundation?
Clark's will established a Bellosguardo Foundation to foster the arts and stated that it should receive the Clark summer home overlooking the Pacific at Santa Barbara, as well as Clark's art collection and cash.
The deal reached Tuesday provides much of what Clark intended to the foundation, but made changes that led to an appeal.
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One of the named trustees, Clark's California attorney, established a Bellosguardo Foundation in California, but the settlement left that group out of the deal. Instead a new Bellosguardo Foundation will be formed in New York. The judge had allowed the California group to take part in the court case in New York right up until it objected to the settlement—at which point the relatives objected to the California group being in the case. The legal quandary is this: The will set up the foundation, but until the will is determined to be valid by a judge or jury, does the foundation exist, and can it be represented in court? The law on this question is thin. Judge Anderson ruled after a secret hearing that the California foundation can't be represented. (Read the decision.) The California group filed an appeal on Monday.
That question could ultimately end up in federal court. If the New York appeals court doesn't allow the California group to participate in the settlement, the issue could be revisited in a California court when the New York Bellosguardo Foundation tries to take control of the property. That conflict between states could ultimately become a federal case.
In addition to the Clark summer home, valued conservatively at $85 million, the new Bellosguardo Foundation would receive Clark's $1.7 million doll collection, which had been left to the nurse, and $4.5 million in cash.
The foundation also could face liabilities. The settlement assumes that the Internal Revenue Service will cooperate by lowering the estate's tax bill. Clark was so relentlessly generous to her staff and friends that she died owing the IRS $82 million in gift taxes, with the bill rising $9,000 per day from penalties and interest. The settlement is premised on the hope that the IRS will forgive the penalties, estimated at $16 million to $18 million, because the settlement mostly benefits charities. If the IRS insists on collecting the penalties, that bill will lower the amount flowing to the foundation and could ultimately require it to sell the California property.
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Other elements of the settlement proposal include:
—By Bill Dedman, NBC News.
Bill Dedman is the co-author of the new book "Empty Mansions: The Mysterious Life of Huguette Clark and the Spending of a Great American Fortune." The co-author, Clark's cousin Paul Clark Newell Jr., is not one of the relatives seeking her fortune but would probably be a witness at any trial to describe his telephone conversations with Clark.