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Billionaire businessman, Leonardo Del Vecchio died in 2022 at the age of 87 leaving behind eight heirs to share in his interest in Ray-Ban, Oakley and LensCrafters and his various real estate and other holdings (estimated at $24B). Of course, they’ve allegedly been fighting amongst themselves for control ever since.
Recently, Del Vecchio’s 31-year old son and heir, Leonardo Maria Del Vecchio, gave an interview in which he acknowledged his struggles with drugs, claimed to have slept with more than 2,000 women (busy!) and said his billionaire father gave his children everything but love. I see….
So, what can we learn from this reminder to focus on estate planning (see what I did there)?
We can take a closer look at sobriety clauses in a trust (put them under the lens LOL)..
A sobriety clause allow a grantor (someone creating a trust) to establish conditions (or safeguards) around distributions to a beneficiary struggling with substance abuse. Rather than simply handing over an inheritance at age 25, 30, or 35, the trust can give the trustee discretion to protect that beneficiary until circumstances improve.
For example, a trust might allow the trustee to suspend unrestricted cash distributions if a beneficiary is struggling with addiction, while continuing to pay directly for treatment, rehabilitation, housing, medical care, and other appropriate expenses. The trust can also provide a path for distributions to resume after the beneficiary demonstrates sustained recovery, with appropriate professional guidance.
Of course, one child may be perfectly capable of managing a significant inheritance at age 25, while another may need additional terms, whether because of addiction, financial irresponsibility, married to a no-goodnik or other circumstances. Equal and fair aren't necessarily the same thing.
It’s true that sobriety clauses need to be drafted carefully and we generally provide the proposed wording to our clients to read and edit as appropriate for their unique family dynamic. We don't want a trust that discourages someone from seeking treatment or creates an impossible standard that keeps them from ever accessing their inheritance.
So, there you have it. We learn that money can't buy happiness (or apparently, family harmony) and that hindsight is 20/20 (can’t help myself!) But, mostly we learn that while most folks can benefit from a grantor revocable trust, it’s not going to be the same for everyone. Trust terms are very nuanced and should be customized to fit your unique family dynamics and beneficiaries’ needs.
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