By Sarah Stewart Legal Group
We all know Hugh Hefner. As the mogul businessman with the groundbreaking idea behind Playboy magazine, he was quite the controversial figure. Despite your personal beliefs about Hugh’s business and life choices, he is a role model for all of us in one aspect of his life– Estate and Financial Planning.
Say what you will about Hef, but his business acumen was amazing. He started Playboy in 1953 with $8,000 and transformed it into a global business. Hef was able to take his eventual fortune from this business and plan well for his retirement and the twilight years of his active lifestyle.
Hef began planning for his future and his empire in about 2010 when he divorced Kimberley Conrad. Records show his net worth at the time was around $43 million and his income was about $3.5 million a year.
With the rise of the internet, Hef knew his business could suffer. So, he made a decision in 2011 to make Playboy private by partnering with a private equity firm. This move netted him more than $207 million. He included a deal in the purchase contract that gave him 37% of the stock and a $1 million per year income from the new business.
Hef took his estate planning prowess to a new level in 2012 when he negotiated a pre-nuptial agreement with his 3rd wife. Through the agreement, he established a trust solely for the benefit of the wife and kept all of his agreed, non-marital assets separate.
With this decision, Hef dodged a common estate planning bullet. He was able to keep his wife happy and keep his assets separate and protected for his adult children. Those who don’t take these steps in blended families, often have disagreements, and many times full out wars, over assets after the parent’s death.
It is likely Hef used several trusts to plan for his children and spouses after his death. In fact, it is rumored that he even left half of his estate to a charitable trust to minimize estate taxes.
Hef’s one mistake was leaving his 37% share of the company tied up in stock. Now, his heirs will have to sell the stock to realize the value, which is hard to determine since the public will not be able to purchase a private company’s stock.
Overall, though, Hef’s planning was sound and inspired. He was able to take a business that would soon be affected by the technological revolution of the internet and turn it into a free home and yearly stipend. He was able to plan for the people who were most important to him without sparking a massive legal battle. And, he even planned out his burial, purchasing a plot next to his first model, Marilyn Monroe. I have no doubt his family is eternally grateful for his foresight.
We can all take a cue from Hef’s playbook. No matter the size of your estate, planning is essential, especially in blended families. Make a plan for yourself and your loved ones centered around your retirement, and your eventual death. The hardest step is the first step.
Reach out to an experienced estate planning attorney and financial planner to help you plan for your retirement and family today!