Law Talks Episode: A deeper look at Giorgio Armani’s succession plan and why clarity matters

Robyn: Good morning and welcome to another edition of law talks here on 4CRB. Well, today we’re looking at what we can learn from the will of fashion legend Giorgio Armani, who passed away in September at the age of 91. His will and succession plan made headlines not just because of the size of the fortune, but because of the detail he went into about how his empire should be managed.

Now, most of us won’t leave behind a billion-dollar company like Armani did, but we do all have a legacy. To help us understand what lessons we can take from Armani’s approach to his will, I’m joined by Attwood Marshall Lawyers estate planning lawyer Leigh Steyn. Welcome to the program.

Leigh: Thanks, Robyn. It’s great to be here again.

Robyn: Now, for those who have only seen the headlines, what exactly did Giorgio Armani put in his will that made people take so much notice?

Leigh: Well, he didn’t just write a simple will leaving everything to family or friends. He actually gave a really detailed instruction about his company. He set out a two-stage plan. His heirs were told to sell, first off, sell 15% of the fashion house within 18 months. And then between three or I think it is five years after his death to sell a further about 30% to 54.9%. And he didn’t actually stop there. He even named who his heirs should prioritise selling to.

So those included big luxury groups like LVMH and Loreal, and then he took it one step further. So, he really planned this out. He took it one step further and he gave them a fallback option of putting the company on the stock market.

So, it just shows you like how carefully he really thought this plan through which is great.

Robyn: He really did. He put some thought into it, didn’t he. So, what’s the first lesson that we can take from that?

Leigh: Lesson; don’t leave vague instructions. Like I said, he didn’t just say “sell it when you can”. He gave his executors a road map.

Robyn: A time frame.

Leigh: Absolutely. Which is so important. And I mean, I often hear the words, “it doesn’t matter. I’ll be dead. They can do what they want.”

These are your belongings. Honestly, you got to care about your assets. And I mean, it really does matter. You built them during your lifetime.

Something to think about is if you have like a family business or investment properties or something small like a small car collection, being clear about how it should be dealt with avoids uncertainty and arguments later. And it’s just a good plan to do.

Robyn: And he also had a backup plan, didn’t he? Is this something people should do when drafting a will?

Leigh: Yes, absolutely. Look, he had a comprehensive backup plan, and he told them who his preferred buyers were and if they weren’t interested, then he allowed his heirs to list the company publicly. So that’s just a really smart lesson. Like always plan for what happens if plan A doesn’t work. Make a plan B.

And for everyday Australians it might mean something like if my daughter doesn’t want the property, sell it, get rid of it, and divide it, divide the proceeds. That’s just an example. And that way your executors know exactly what to do. It’s so important.

Robyn: It takes the guess work out of it.

Leigh: Absolutely.

Robyn: Another interesting detail was who Armani involved in the plan?

Leigh: Yeah. So, he, Armani bought in his right-hand man. Any Italians listening, I think his name was Pantaleon de Loco. I hope I’ve pronounced that right. But that’s who he worked with for 40 years. So, he chose a person who knew his business inside and out.

And that’s another lesson. Don’t just pick executors based on family positions or feelings. Like I should select all my adult children because it’s the fair thing to do. No, you’ve got to choose someone who understands the assets they’ll be managing. Or consider like a professional. Maybe that’s a more appropriate choice.

Robyn: Some people might say Armani is ruling from the grave by putting in so many instructions as he did. Do you see it that way?

Leigh: No. I can see why some people think that. But as an estate planner, no.  

I just think his will wasn’t micromanaging. It was actually just giving clear guidance. So, his heirs weren’t left guessing. And it’s so important. Like, why leave your children thinking, what would Mum do? Tell them. That’s the best gift you can really give them once you’re gone. They are mourning you. They aren’t thinking with a clear mind.

So, in Australia also vague wills, they are one of the main reasons estates actually land up in court. Right now, there’s a case where a judgement was handed out recently in Sydney where they found the will was too vague to determine, and who the actual heirs were, and this hasn’t just cost the heirs money, it’s cost the estate money. So clear directions just reduces the stress on family and it just helps executors act quickly without legal battles. Something to think about.

Robyn: Yeah. So, from the way Armani handled drafting his will, it’s clear to see that estate planning isn’t simply about money, isn’t it?

Leigh: That’s right. That’s absolutely right. In Armani’s case, it was about the business empire, his values and everything he had worked so hard to protect. But the same, principles actually apply to personal wishes. So, like to everyday people like you and me, we can include instructions about funeral arrangements or we can leave meaningful gifts for a particular family members, or a charity of your choice.

I’ve had people leave written letters or record video messages to be shared at special times, like weddings, birthdays, that sort of thing. So, the personal side can mean just as much as the financial side of estate planning.

Robyn: So, from what you have described, Armani’s will was years in the making. Does estate planning have to be this complicated?

Leigh: Look, he started his plan, if I read correctly, and it was about back in 2016. And so his estate and business succession, it’s obviously more complex than the average estate plan. And yes, I suppose proper estate planning should be given sufficient thought and consideration. I mean it doesn’t need to be a drawn-out process like his was. If you just make sure you use an estate planning lawyer who specialises in the area, we’re able to ask the right questions and that’s really important because once we have those questions answered, whoever your estate planner is, they’ve got an idea of what they are, what assets you have and what the individual wishes to do with the estate and they can start forming a plan quite quickly and drafting documents in a relatively short amount of time too.

So, depending on how complex your estate is, it will really determine what type of documents you need. Some people wish to have a testamentary trust, or a memorandum of wishes, or just make changes to asset structure or ownership of property, so that’s a bit more complicated and it may take a little bit longer to draft than a simple will, but it can still be turned around relatively quick. We encourage people to also update, look at their documents, every three years and update them.

So, 2016 to 2025.

Robyn: I imagine there was a lot of updates in between there.

Leigh: I reckon, yeah.

Robyn: What if someone doesn’t like what’s in the will? After all that careful consideration, could Armani’s plan be challenged?

Leigh: In Australia, if somebody feels that they’ve been left out of a will unfairly and they are considered an eligible person, they can actually make a family provision claim. But someone would have to prove they have a legitimate claim for provision, such as like a spouse or child or dependent and whether they were financially supported by him. It’s unlikely that in Armani’s case that this will happen as he didn’t have any children, and he was never married.

Robyn: That’s probably why he had so much money.

Leigh: Exactly. I’ve got three children myself, so absolutely. But he also did everything in his power, I suppose, by taking so long to reduce the risk by making his wishes quite clear and getting advice and putting a meticulous plan into place.

And that’s really what makes the difference, I suppose. Not I suppose, that’s actually what makes a difference, and that’s what helps protect your estate.

Robyn: Well, there are definitely many lessons we can take from Armani and how he planned for the succession of his empire. Even if we don’t share his wealth, we all have family treasures and a legacy we leave behind.

Fascinating topic this morning, Leigh. Thanks for joining us.

Leigh: Thank you for having me.

Robyn: You’ve been listening to law talks here on 4CRB, which you can hear every Friday morning from 9 o’clock. And if you have missed any part of this interview, it will be on our website 4crb.com.