Congratulations to Hugh Hefner (86) and his new wife, Crystal Hefner (née Harris) (26), who were wedded on New Year’s Day at the Playboy Mansion. As the happy couple embark on married life together, we consider the estate planning changes that couples (including civil partners) in a similar position might be considering following their conjugal union.
Whether the gossip about the “iron-clad” pre-nuptial agreement between Mr and Mrs Hefner is true, couples are well advised to consider a pre-nuptial or a post-nuptial agreement.
Rather than being designed to deprive a soon-to-be former spouse of the richer partner’s assets on divorce, these can be sensible agreements in which the couple can agree how to make certain that each party is well looked after in the event of divorce, while ensuring that other interested parties, such as children from previous marriages or sometimes even former spouses or partners, are not forgotten.
A new will:
In England, each spouse would need to re-execute his or her will on marriage (unless made in anticipation of the union). Although this seems more important for couples where there is a significant age gap, in fact it is vital for all couples as the act of marriage revokes an existing will.
Dying without a valid will is likely to result in assets passing only to the spouse and children in fixed proportions, without the gifts to institutions or charities such as those that Hugh is reported to have included in his own will.
In England, spouses with the same domicile status benefit from significant inheritance tax mitigation and if the recently issued draft legislation is enacted, spouses with a mis-matched domicile status can elect to have the same domicile status, in effect, postponing the 40 per cent inheritance tax charge until the death of the second spouse irrespective of actual domicile at the date of death.
When executing the new will, inheritance tax advice should also be taken.
Hugh Hefner and Crystal Harris at their wedding earlier this month
Lasting powers of attorney:
Whether or not one spouse is significantly older than the other, it is prudent to execute lasting powers of attorney (in relation to both health and welfare and to property and affairs) in the event that he or she loses mental capacity – even if these are never used in practice. In England, the power to manage a person’s assets is separate from the power to make health-care decisions.
The distinction is sensible, for example, when an adult child may already be involved in the family business and have a say in the family finances, whereas a new spouse may have a deep emotional connection enabling him or her to make the sorts of decisions that the incapacitated partner would have made about his or her own care needs.
The grieving process for a bereaved spouse is never easy, but some administrative difficulties following a death could be minimised with a little forward planning.
Everyone should ensure that their close family members know where to find their will and/or letters of wishes, particularly if these contain funeral or cremation wishes. A list of internet passwords and user-names should also be kept securely with testamentary documents to facilitate the winding-up of a deceased’s affairs.
This article first appeared on Spear’s
Corinne Staves is an associate at Maurice Turnor Gardner LLP.