On the maternal side of her family, she is a niece of two child stars of the 1970s, Kim Richards and Kyle Richards. Hilton was related by marriage to Nicole Richie's godmother, Nancy Davis, when Nancy's brother, Greg, was married to Kim Richards. Hilton's paternal grandparents are hotel chairman Barron Hilton, and his wife, the former Marilyn Hawley; Barron Hilton's parents were Hilton Hotels founder Conrad Hilton and his first wife, Mary Barron.

Hilton moved between several exclusive homes in her youth, including a suite in the Waldorf-Astoria Hotel on Manhattan, Beverly Hills, and the Hamptons. As a child she was good friends with other socialites as Nicole Richie and Kim Kardashian. She attended her freshman year of high school at the Marywood-Palm Valley School in Rancho Mirage, California followed by a short time at Convent of the Sacred Heart (which she attended with Lady GaGa) and the Dwight School in New York for her sophomore and junior years. She was then transferred to the Canterbury Boarding School, in New Milford, Connecticut where she was a member of the ice hockey team. However, in early 1999, she was expelled for violating the school rules. Hilton later earned her GED.

In December 2007, Hilton's grandfather Barron Hilton pledged 97 percent of his estate to a charitable organization founded by his father, the Conrad N. Hilton Foundation. An immediate pledge of $1.2 billion was made, with a further $1.1 billion due after his death. He cited his father's actions as the motivation for his pledge. According to reports, the potential inheritance of his grandchildren is sharply diminished.

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