Tax Lessons to be Learned from Celebrity Estate Plans
When managed properly, a celebrity’s image and likeness can continue to produce considerable income after death. This type of intellectual property is considered part of their estate and the IRS can tax its value. In the case of pop star Michael Jackson’s estate, that recently meant an IRS bill to the tune of $64.5 million, years after his death, which is about 40% of his likeness’ valuation of $161 million. This massive tax could certainly have been avoided by using one of these estate-planning strategies that minimize the taxable value of a person’s image and likeness.
Robin Williams made a charitable bequest of his image and likeness to a foundation. It was set up in his name, allowing his estate to get a charitable deduction against the estate tax.
Williams also established a 25-year time ban to prevent any future exploitation of his image. A time restriction lowers the value of a celebrity’s name and likeness because the value is typically lower at the end of the ban than at the date of death.
State of Residence
Some states don’t recognize inheritable postmortem rights to likeness. This means the estate can’t profit from it. Consider your state’s laws when Wills and Trusts planning so you can benefit from any available tax breaks.
Consult with Multiple Appraisers
Get one appraisal and have another appraiser act as a consultant to point out where there might be room to argue against the valuation.
Estate planning failures of celebrities often are featured in the tabloids and news sites as soon as weeks after their deaths. Fortunately, they provide valuable Wills and Trusts planning lessons for the rest of us. While their fails may be more expensive, even a small failure can have a huge impact on your family’s future and well-being. Don’t leave your family holding the bag, especially an empty one.
Your family is worth the time for you to have a Family Wealth Planning Session with us so you can make empowered, informed choices for the people you love. As your Personal Family Lawyer®, we can walk you step by step through a process that will minimize your tax liability and keep your family out of court and out of conflict.
This article is a service of Levi Alexander, Personal Family Lawyer®. We don’t just draft documents, we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session™, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.
Photo by RODNAE Productions: https://www.pexels.com/photo/fedora-hats-hanging-on-the-wall-5698912/