Prenups can be boring legal instruments that protect a person’s assets in the event of a divorce. Or, they can be crazy legal agreements that allow a couple to make demands on each other’s body. Ice-T and his wife Coco Austin have been married since 2002 and reportedly have a prenup that gives Ice rights to Coco’s body, not her money. Their unusual prenup gives Ice -T the rights to Coco’s breast and butt implants if they ever divorce. We don’t know if the purpose of this is to reiterate that he paid for them or what –but it’s highly unlikely that a court would enforce that kind of promise!
Here at FastWill, we don’t recommend asking your spouse to cough up *intimate assets*, but in some cases, both spouses can really benefit from a prenuptial agreement. Wills, trusts, and prenuptial agreements are very different legal documents that can work together to protect a person’s estate in the event of a divorce. So, let’s look at how wills, trust, and prenups work, with an assist from the man, the myth, the legend: Hugh Hefner.
Hugh Hefner’s Late-in-Life Moves
Hugh Hefner used wills, trusts, and prenups to shrewdly manage his very wealthy estate. In 2010 he divorced his second wife, Kimberley Conrad. His personal wealth at the time was about $43 million in addition to the value of his Playboy Enterprises stock, plus some real estate investments. That Playboy stock was worth a lot in 2011, so Hefner shrewdly worked with a venture firm to take the company private. The deal gave him a big payout, plus a guaranteed $1 million a year, plus the right to reside in the Playboy Mansion for life (the Mansion was owned by Playboy Enterprises). The stock buyback was a very smart idea because Hefner did not invest any of his own money to get those shares! He retained about 37 percent ownership of the company. Getting cash was the right idea since paper magazines were quickly becoming obsolete. Hefner made the move to take the company private and cash out at the right time since the company took a nose dive in profits.
What’s that have to do with his estate plan? Read on.
Wills & Trusts
First, let’s get familiar with the concepts of wills and trusts. These are two of the most common estate planning tools used to transfer assets to beneficiaries after someone's death. A will is a legal document that specifies how a person's assets will be distributed after their death. It can also include instructions for the care of minor children, the appointment of an executor to handle the estate, and other provisions.
A trust, on the other hand, is a legal arrangement in which assets are held by a trustee on behalf of beneficiaries. Trusts can be used for a variety of purposes, including to provide for the care of minor children, to protect assets from creditors, and to minimize taxes.
While both wills and trusts can be used to transfer assets after death, trusts can offer some additional benefits. For example, trusts can be used to avoid probate, which is the legal process that is used to validate a will and transfer assets to beneficiaries. Probate can be time-consuming and expensive, and it can also be subject to public scrutiny. A trust can allow assets to be transferred directly to beneficiaries without going through probate. Additionally, trusts can provide greater flexibility and control over how assets are distributed since they can specify conditions that must be met before assets are transferred.
Hefner’s Third Marriage
Hefner married again in 2012, just one year after the Playboy Enterprises deal, but this time he came prepared with a prenup. His new wife was younger than his adult children, which normally would’ve caused suspicion and intrigue. However, Crystal Harris signed a prenuptial agreement that gave her $5 million dollars if they divorced, plus a $5 million dollar house. Hefner transferred the house to a trust that Harris controlled. If they were still married when he died, she would still get that trust and a nice payout.
Prenuptial agreements, which are commonly known as prenups, are legal documents that are signed by couples before they get married. They typically specify how assets will be divided in the event of a divorce or the death of one spouse. Prenups can be used to protect assets that were acquired before the marriage, to provide for children from a previous marriage, or to protect family businesses or other assets.
While prenups are often thought of as a way to protect assets in the event of a divorce, they can also be used as part of estate planning. For example, a prenup can specify how assets will be divided after the death of one spouse. This can be especially important if one spouse has children from a previous marriage since a prenup can ensure that those children receive a portion of the estate. Additionally, a prenup can be used to protect assets that were acquired before the marriage, such as a family business or a trust.
That’s exactly how Hefner used his prenup with Harris. Hefner’s deal with Harris gave her security and also protected the interests of Hefner’s four adult children. Maybe that’s why Hefner’s kids wound up praising Harris - she wasn’t a threat to their inheritance. They also said she took good care of their father at the end of his life. When he died, she got the $5 million and the trust. The remaining Hefner estate was split in half, with half going to the children in trusts, ensuring that the details were not made public. The other half of the estate was donated to the University of California Film School and other charities, which was what Hefner wanted his money to support.
How Prenups Impact Your Estate Plan
It’s possible that a prenuptial agreement could help you protect your financial future in case of divorce while also contributing to your estate plan. For example, a prenup that specifies how assets will be divided in the event of a divorce should be combined with a will or trust to ensure that those same assets are distributed as intended after death. The same is true if there’s a trust that provides for the care of minor children. You want to coordinate the trust with a prenup to ensure that those children are provided for in the event of a divorce.
You should also consider updating all of your estate planning documents after a divorce or remarriage.
