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What SA couples can learn from Hugh Hefner's antenuptial contract

Oct 09 2017 19:41
Carin Smith

Cape Town - Following news of the death of multi-millionaire Playboy founder Hugh Heffner, reports emerged that his 30-year-old wife was set to inherit nothing from his estimated $43m (about R593m) estate due to a very tight antenuptial contract.

Could something similar happen in South Africa?

Alida Brink, fiduciary specialist at Old Mutual Wealth, told Fin24 that many second wives in SA do worry about not inheriting anything due to their husband having children from a first marriage.

"Given the rising rate of divorce and the increasing prevalence of blended families in SA, good estate planning can mean a great deal in easing the burden placed on loved ones left behind after the death of a breadwinner," said Brink.

“This is particularly important in cases where individuals – especially ultra-high net worth individuals – have multiple ex-partners and children from previous relationships. An unclear will can result in years of fighting about how an estate should be divided up among different families and spouses," she said. 

How to interpret an unclear or badly drafted will may have to be settled in court, said Brink, which can be a costly affair per se.

Maintenance of surviving spouse

Brink said that in SA the Maintenance of Surviving Spouses Act makes provision for a surviving spouse who is left out of the will of a spouse to claim against the estate for maintenance. The surviving spouse would have to prove to a court that he or she was a dependant of the deceased and the estate must be able to afford the claim.

"The court will then work out how much maintenance the surviving spouse would need over his or her life expectancy. If, however, the surviving spouse is not destitute and was not dependant on the deceased, then the claim might not be successful," she said.

In Hefner's case he apparently gave his wife $5m - about R70m - and an apartment before his death.

Brink said it could also happen that a spouse sets up a trust to take care of the surviving second husband or wife and that upon the death of the surviving spouse the children from the first marriage will inherit.

"The reason why this is often done is to avoid the second wife or husband's children who are not the children of the deceased, from inheriting anything from the deceased later on," she said. 

Estate planning

"Spouses should include each other in the planning process. If one excludes the other from his or her estate, it is better to explain why and avoid fights over the same interests," said Brink.

"Maybe in that case even leave the surviving spouse an investment in his or her own name - as it turned out in the Hefner case. Second spouses and children from previous marriages seem to fight a lot. Therefore, my tip would be to include your spouse in your estate planning process."

Brink pointed out that every situation is different. That makes it, in her view, important to have an expert financial planner to handle the process properly.

SA law also sets out certain requirements for a will to be valid.

"It can be expensive and time-consuming to test the validity of a will. Therefore, it is much better to have someone capable of doing the estate planning and drawing up a valid will, to handle it beforehand," explained Brink.

She added that it is also important that stipulations in a will be practical and executionable. An example would be where cash is left to someone, but there is no liquidity in the estate.

In Brink's view, the most important thing to remember is to update your will as soon as any circumstances change. This will ensure that it reflects current reality.

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old mutual  |  hugh hefner  |  money  |  trusts  |  wills  |  personal finance
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