When most people think about estate planning and the legal documents that will dictate the terms of the distribution of their wealth after their deaths, they often focus their attention on the last will and testament or perhaps a revocable living trust. It's true that these documents are essential pieces of many estate plans, but they may not be the only ones. An example of how this can work is the estate plan of Hugh Hefner. Based upon news reports, this celebrity estate plan appears to have been an example of how a wide variety of tools, including planning with wills, trusts and even prenuptial agreements, can come together successfully and synchronize to achieve one's overall estate planning objectives.
Like a lot of people, Playboy magazine creator Hugh Hefner had some elements of his set of estate planning goals that presented some unique issues. Whether one approves or disapproves of the method by which Hefner made his millions, one can still learn a lot from the way his overall plan appears (based upon reports) to have achieved his goals through the techniques used within his plan.
In Hefner's case, one unique goal was his desire to ensure that his much younger wife would be “taken care of” financially. While most people probably aren't facing a situation where they must plan for a spouse who is 60 years younger (as was the age gap between Hefner and his third wife, Crystal) many people may find themselves in a position where a substantial age gap exists and that gap presents its own set of issues. Planning to provide for a spouse 2 or 3 years your junior is much different than planning to provide for a spouse who is 25 or 30 years your junior.
Early reports about Hefner's estate plan trumpeted the fact that Hefner's widow was set to get nothing from the publisher's probate estate due to the terms of his will and what reporters described as an “ironclad” prenuptial agreement. Most people don't think about prenuptial agreements and estate planning, but the two can go together. A “prenup” can be a helpful estate planning tool for someone who has children from a previous marriage or has certain cherished assets that they want to ensure go to children or other blood relatives and not to the new spouse. If you decide to execute a prenuptial agreement and intend to use it to foster some of your estate planning goals, it is important to have a clear and careful conversation with your attorney to make certain that your prenuptial agreement and your other estate planning documents are written in such a way that they will work seamlessly together and not cause any legal conflicts that could lead to courtroom litigation.
In the case of Hefner's estate, it was true that he and Crystal had a prenuptial agreement and that his will left her nothing from his probate estate. These facts, however, do not tell what the late radio commentator Paul Harvey might have called “the rest of the story.” There are many reasons why a person might choose to disinherit someone close and leave them nothing in their will. One of those reasons is if that person's overall estate plan included accomplishing the goal of providing for that beneficiary through other means outside the probate estate. In this case, Crystal Hefner received $5 million in cash. Additionally, Hugh Hefner, in 2013, bought a 5,900-square-foot California home (complete with 4 bedrooms, 5 bathrooms and an “infinity” pool) in the Hollywood Hills. He placed that home in a trust. Upon his death, that home went to Crystal. Hugh Hefner had an estate plan objective for his wife… it just wasn't contained within his will.