Tax Lessons to be Learned from Celebrity Estate Plans
A celebrity's image and likeness can continue to produce considerable income after death. This type of intellectual property is considered part of your estate, and the IRS can tax its value. In the case of pop star Michael Jackson’s estate, that recently met 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.
Michael Jackson’s estate planning fail could certainly have been avoided by using one or more estate planning strategies that help minimize the taxable value of a person’s image and likeness. Here are some examples of such strategies.
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 do not recognize inheritable postmortem rights to likeness. This means the estate cannot profit from it. Consider the applicable laws of your state when doing your estate planning so you can benefit from any available tax breaks.
Consult with Multiple Appraisers
Obtain one appraisal and have another appraiser act as a consultant to point out where there might be room to argue against the valuation.
Celebrity estate planning fails grace the cover of tabloids and news sites as soon as weeks after their deaths. Fortunately, they provide valuable estate planning lessons for the rest of us. While their fails may be more expensive, even a small fail 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!
At Kira Doyle Law, we can walk you step by step through a process that will minimize your estate tax liability and keep your family out of court and out of conflict. If you’re ready to make empowered, informed choices for the people you love, begin by calling our office in St. Petersburg, Florida, at 727-537-6818, to schedule an appointment with one of our experienced Estate Planning Attorneys today!