As you probably heard, Hugh Hefner, the magazine mogul and vanguard of the sexual revolution, died last fall. At first all we knew about his estate plan was that he would laid to rest in the crypt next to Marilyn Monroe, his first cover girl, which he purchased for $75,000 back in the 1990s. Now some other details have emerged, and they are pretty intriguing.
Although the “Playboy lifestyle” involves a certain amount of partying, it is no secret that Hef was not a fan of those who partied to excess or relied on drugs to have a good time. After becoming addicted to prescription amphetamines and mourning the loss of his secretary and confidant, Bobbie Arnstein, who committed suicide after a drug arrest, Hefner lived a substantially substance-free lifestyle. His estate planning documents reflect a desire that his widow and four adult children do the same.
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.”
This is a fairly common provision to include in a trust, so it is not a sign that Hefner is particularly concerned that his beneficiaries have addiction issues. It should be viewed more as a reflection of Hef’s values, and could even be boilerplate language that his attorney recommends anyone with a large estate include in order to prevent waste.
If this provision is a reflection of Hef’s values, it makes this trust something that is known as an “incentive trust.” An incentive trust incorporates the trust creator’s values and wishes by tying disbursements to good behavior. For example, some incentive trusts reward beneficiaries for graduating from college or buying a house.
Anyone who wants to include some incentive provisions in their trust documents should be sure they are working with an experienced estate planning attorney because courts are not shy about striking down provisions they consider improper. And if you want to encourage things like staying below a certain weight or marrying someone “appropriate,” forget about it. Courts will not uphold provisions that are cruel or overly controlling.