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Monday, January 29, 2018

Hefner Demands Heirs Be Drug-Free

When Hugh Hefner, the famous founder of Playboy magazine, died, speculation about who would inherit his fortune immediately began. Now, some details have been released, and they are a bit shocking considering Hef was known as much for the parties he threw as his publishing prowess.

According to ET, the trust Hefner set up to distribute his wealth includes provisions that will cut off any beneficiary who is dependent on drugs or alcohol:

“If the trustees reasonably believe that a beneficiary of any trust routinely or frequently uses or consumes any illegal substance so as to be physically or psychologically dependent upon that substance, or is clinically dependent upon the use or consumption of alcohol or any other legal drug or chemical substance that is not prescribed by a board certified medical doctor or psychiatrist in a current program of treatment supervised by such doctor or psychiatrist, and if the Trustees reasonably believe that as a result the beneficiary is unable to care for himself or herself, or is unable to manage his or her financial affairs, all mandatory distributions to the beneficiary, all the beneficiary’s withdrawal rights, and all of the beneficiary’s rights to participate in decisions concerning the removal and appointment of Trustees will be suspended.”

The document goes on to say that the trust’s trustees have the authority to request a beneficiary undergo drug testing or treatment if they suspect abuse. The trustees also have the authority to reinstate a beneficiary that has previously been cut off if the beneficiary is sober for 12 months, and the trustees think the beneficiary is able to care for himself or herself and manage his or her financial affairs again.

Hef’s beneficiaries, which include his four children, Christie, David, Marston and Cooper, and his widow, Crystal, have not released a statement or filed a legal objection to these terms, and if they do object, they probably will not get very far. One of the benefits of using a trust in your estate plan is that you, like Hef, can exert a bit of control over those you want to inherit your wealth, even from beyond the grave.

The provisions in Hef trust are fairly typical in what are knowns as “incentive trusts.” These trusts incentivize good behavior like graduating from college or going to rehab, and disincentive bad behavior like drug abuse. Courts and trustees have become fans of these trusts because they take some of the hard decisions trustees are forced to make when beneficiaries are making poor life choices out of their hands.

However, courts don’t approve everything people try to sneak into incentive trusts. Courts have struck down provisions requiring beneficiaries maintain a healthy weight, or marry within a certain religion or race. At that point, the trust isn’t encouraging generally good behavior, it is parenting from the grave.

Anyone who wants to include some incentives in their trust documents should be sure they are working with an experienced estate planning attorney that knows where the courts draw the line when it comes to “dead hand control” and how to properly draft these more complicated documents.


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