In a recent Trading Secrets podcast, fashion designer Rebecca Minkoff revealed that she has a special provision in her trust in case she divorces or dies before her husband, Gavin Bellour. Rebecca explained that their will contains a so-called "floozy clause," that states if her husband decides to move on "with some new hot young thing" after she dies or they divorce, all her assets immediately go into a trust for the kids, making sure the new partner gets none of her hard-earned money.
Rebecca said the clause was written before either she or Gavin had any money, but she banked on herself becoming successful and credits her mom for coming up with the idea for the clause. She noted she didn't use the clause because she doesn't trust her husband but rather out of fear "of the spell another woman can cast on them after you're dead." The logic here is likely to save their children from a potential lawsuit against an unscrupulous suitor. Minkoff mentioned that if Gavin remains single, their assets would be divided.
Unique Provisions
While Rebecca's provision may sound unique, it's actually very common for individuals to have specific thoughts and directions that they want carried out after their death. These wishes can range from detailed provisions directing the administration or distribution of assets to making provisions for "unexpected" beneficiaries, even including special purpose trusts for pets. An individual may also want to restrict who their beneficiaries marry or the religion of a spouse.
An example of a unique administrative provision is the Special Trustee for Hostile Acts that one woman added to her trust in hopes of bringing harmony to the lives of her five frequently disharmonious children after her death. The Special Trustee had the power to limit trust distributions to a child determined to have engaged in a hostile act. (Spoiler alert: the clause didn't achieve the desired result.) In an unpublished California decision, the Appellate Court upheld the provision and declined to limit its application as requested by several of the children.
While a trust for a pet faces unique issues arising from the rule against perpetuities (an interest in property must vest within 21 years of a life in being), many states have enacted laws specifically authorizing pet trusts. Other unique provisions will typically be enforced provided the provisions don't violate public policy. Thus, for example, a provision imposing religious marriage requirements will generally be enforced if it doesn't impose a total restraint on marriage or promote divorce. In contrast, a provision providing a financial benefit for an illegal act would likely be invalid.
There's no specific name for an individual's unique post-death provisions, and "floozy clause" seems fairly descriptive here. It's what the provision does, not what it's called, that's of primary importance.
Issues with the "Floozy Clause"
Operationally, if funds or assets pass outright to Rebecca's husband at some point in time—say he hasn't "shacked up" with someone within five years after Minkoff's death—then he could thereafter do whatever he wanted with those assets. The only solution is to retain the assets in an irrevocable trust that contains the limitations and restrictions that Rebecca wants for her husband's entire lifetime. This leads to another potential issue: A specific concern in connection with a specialized clause applying to a spouse is that the limitations or restrictions may run afoul of the rules governing the federal estate tax marital deduction, which prohibit the surviving spouse's interest from being "terminable." Thus, a gift in trust for the surviving spouse that will revert to the children if the spouse engages in certain actions won't qualify for the estate tax marital deduction in the first instance. To qualify for the federal estate tax marital deduction, the surviving spouse must be entitled to receive the net income of the trust in all events, at least annually, during the surviving spouse's entire lifetime. Not being able to qualify for the marital deduction may not be a consideration today because the amount that an individual can pass free of gift and estate tax is almost $14 million (currently scheduled to be reduced to approximately $7 million on January 1, 2026), but it could be a concern for a high-net-worth (HNW) individual. The HNW individual will need to choose between qualification for the marital deduction or the termination provision, although there are ways to provide for flexibility in making this decision for a brief period following the individual's death.
Minkoff's Plan Makes Sense
With that background, it may generally be prudent for an individual to leave the gift to the surviving spouse in an irrevocable trust rather than outright. This is true even if the trust isn't designed to qualify for the estate tax marital deduction. There are potential administrative costs to a separate trust, but there are also benefits in terms of control (that is, the property won't go to a second spouse or girlfriend), and the irrevocable trust will provide creditor protection for the surviving spouse. Such a trust – which appears to achieve most if not all of the same purposes as Rebecca's "floozy clause" – is a garden variety trust and estate planning vehicle. If a "regular" irrevocable trust for the surviving spouse is used, the spouse can still be provided flexibility among descendants, if the individual is comfortable providing their spouse with that flexibility, and the children and descendants will have rights as remainder beneficiaries to ensure that the trust is administered appropriately by the surviving spouse.
Finally, while the desire to ensure that an individual's property passes to their descendants and not to their surviving spouse's next wife or girlfriend is understandable, I recommend that any "floozy clause" not be too draconian. On balance, the children are more likely to be happy if their surviving parent is happy, and if the individual loves their spouse they'll also want them to be happy if they weren't around. Being too restrictive in the "floozy clause" might adversely affect the overall happiness of the family following the individual's death, to everyone's detriment.
Originally published by WealthManagment.com.
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