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 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.
Michael Jackson’s estate planning fail 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 estate 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.
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.
Your family is worth the time for you to have a Family Wealth Planning Session with a Personal Family Lawyer® so you can make empowered, informed choices for the people you love. A Personal Family Lawyer®, 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.
A Family Wealth Planning Session guides you to protect and preserve what matters most. Before the session, your Personal Family Lawyer® will send you a Family Wealth Inventory and Assessment to complete that will get you thinking about what you own, what’s most important to you, and what you can do to ensure your family is taken care of and you’ll leave the Session with absolute clarity about how to make the best choices for your life and death.