Iconic Italian fashion designer Giorgio Armani kept tight control of the brand he founded 50 years ago. He never took the company public and remained the sole major shareholder until his death on Sept. 4 at the age of 91.
Some parts of his will were run-of-the-mill: Pantaleo Dell’Orco, Armani’s life partner of five decades, will retain a 40% stake in his company, Reuters reports.
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But other parts of his final wishes came as a shock to the fashion world. The will stipulates that Armani’s heirs must either sell their stakes in the company in stages, or seek to list the company on the stock market.
The will is very specific. Within 18 months of Armani’s death, his heirs must sell an initial 15% stake of the company to one of a small group of luxury conglomerates: LVMH (the parent company of Louis Vuitton, Dior, and dozens of other brands), French beauty behemoth L’Oreal, luxury eyewear giant EssilorLuxottica, or another firm of “equal standing,” according to Reuters.
Another sale of an additional 30% to 54.9% stake must be made to the same buyer within three to five years. The heirs can opt, instead of selling the second stake, to publicly list the company.
The inclusion of French firms LVMH and L’Oreal was somewhat surprising to industry watchers. Over the years, Armani had rejected purchase offers from various Italian firms, including fellow luxury fashion house Gucci [1].
Armani’s will states that a foundation set up to preserve the brand’s “founding principles” will retain a 30% stake in the company — even in the event of a sale or listing.
Why you need to make your wishes clear in your will
While Armani’s will came as a surprise to the world, it likely was not a shock to his partner or family members, who sit on the board of his foundation, which was created in 2016 to ensure the succession of the designer’s estate [2].
Here’s why it is important to plan well ahead when it comes to your estate — and ensure there are no surprises for your heirs when you pass.
A will is an essential legal document. If you die without one in the U.S., the distribution of your estate will be decided according to state law.
Without a will that specifies who will look after your children if they’re left without either parent, and names a person (called an executor) to administer your estate, your loved ones will be stuck guessing about what your wishes would be. These matters will be ultimately decided in a legal process called probate.
Having a will saves your heirs money: It can help avoid costly legal disputes over how your assets will be distributed, and for large estates, it can help reduce estate taxes [3].
Your will should include your intentions for all your assets: bank, investment and retirement accounts; property (including land and livestock), vehicles, valuables like jewelry, furniture and works of art, and sentimental items. If you have pets, you can also stipulate who you’d like to care for them in your will.
Read more: How much cash do you plan to keep on hand after you retire? Here are 3 of the biggest reasons you’ll need a substantial stash of savings in retirement
Know the laws in your state
In the U.S., there are three types of inheritance law systems that apply if someone dies without a will, or if the will doesn’t include all the deceased person’s assets.
When making your will, it’s important to know which system your state follows: common law, community property or elective community property.
Community property law is a system where spouses are each entitled to half of what they earn during the marriage. The other half of the deceased’s assets may be distributed by the courts to other beneficiaries. Some assets are excluded from marital property, such as gifts, inheritances and assets bought before the marriage.
Most states follow common law, which does not automatically give half the deceased person’s estate to their spouse. In many common law states, a spouse can petition the court for half or a third of the deceased person’s estate.
Under various versions of elective community property, which applies in a handful of states and U.S. territories, common law is effectively followed, but spouses can additionally have automatic inheritance rights if agreements have been signed or a community property trust has been created in advance [4].
Inform your loved ones of your wishes
If you do not have a spouse or children, it is important to establish who will inherit and manage your assets by writing a will.
If you do have children and are divorced, remarried or in a common-law relationship, you will need to lay out your wishes in your will and communicate them to your loved ones. Remarriages are a common scenario where adult children and current spouses can come into conflict when a person dies [5].
Letting your heirs know what kind of inheritance they can expect can help them not only plan their financial futures, but also avoid surprises and conflict among your heirs when you pass on [6].
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Article sources
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[1]. Reuters. “In surprise twist, Armani’s will sets stage for sale of fashion empire”
[2]. Reuters. “Giorgio Armani foundation to propose new CEO, keep 30% stake”
[3]. DHS. “The importance of having a will”
[4]. IRS. “Basic principles of community property law”
[5]. CKLH Family and Estate Law. “5 common estate planning concerns for your second marriage.”
[6]. Bankers Life. “7 tips for talking to adult kids about inheritance”
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.