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Hefner's estate planning may include Q-TIP trust

Like him or not, Hugh Hefner had an influence on society. The founder of Playboy magazine was known for his lavish, unbounded parties and was always flanked by beautiful women. When he died recently at the age of 91, many in Oklahoma may have wondered about the man's estate planning and the distribution of the fortune he spent his lifetime accumulating.

At the time of his death, Hefner was married to his third wife, a 31-year-old model. The couple had no children, but apparently, they did have a prenuptial agreement, so the widow will not likely inherit the $140 million estate he left behind. However, financial experts say Hefner may have provided for his wife of five years through a Q-TIP trust.

A Qualified Terminable Interest Property trust would have allowed Hefner to provide an income for his widow for the rest of her life without subjecting her to estate taxes. When the widow dies, the funds remaining in the trust are then distributed to other beneficiaries named in the trust. In Hefner's case, he would likely have named his four children from previous relationships as the beneficiaries after his wife's death. Aside from the tax implications, the drawback for Hefner's children may be the youth of Hefner's widow. At age 31, she is likely to outlive some of Hefner's children who are already in their 60s.

Q-TIP trusts are often the estate planning tool of choice for those who have remarried but have children from former relationships. However, there are numerous other tools available, and having an understanding of one's options is the first step. Oklahoma residents seeking to begin their estate plans can find answers from a dedicated attorney.

Source: barrons.com, "Did He Leave his Wife a Q-TIP?", Sept. 29, 2017

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