Hugh Hefner, of Playboy fame, recently passed away. He reportedly had an “iron clad” prenuptial agreement with his third wife that kept his fortune from his young bride. Yet, current reports state that the widow will “be provided for” after the death of her husband.
Is it possible for both reports to be true?
In short, the answer is yes. The millionaire could have used a number of estate planning tools to help ensure that his bride was provided for without actually bequeathing anything to his widow. Here are two examples:
- Trust. A Qualified Terminable Interest Property trust, or Q-TIP trust, is a likely option. This legal tool allows the creator to place assets within the trust that the beneficiary, in this case the widow, cannot control. Instead a third party, referred to as a trustee, controls the assets. The widow would likely receive a steady income from the trust, often designed to provide for the “health, support, maintenance and education” of the recipient.
- Insurance. A recent piece in Investment News dug into this issue, noting a life insurance policy could have been an option — though less likely. This is primarily due to Mr. Hefner’s age at the time of his nuptials. The man was in his eighties when he got married. Life insurance policies are generally very expensive at this stage of life.
Regardless of the option used by Mr. Hefner, his canny use of estate planning tools provides a lesson to everyone: estate plans can be tailored to meet your needs. To achieve this goal, it is best to avoid fill-in-the blank documents. These are documents that should be unique to each individual, crafted to meet your needs.