Estate Tax Issues concerning the right of publicity

Paul L. Caron a law professor at University of Cincinatti had reported about a Supreme Court case concerning the Estate of Andrews in 1994 which held that based on Internal Revenue Code Section 2033 that the right of publicity was includable in the estate of the decedent. He also proposed the idea that estate planning to resolve this issue could be done. He suggested gifting the right to a trust towards the start of the individuals career or fame so the increase in value would not be includible in their estate. Although it was not specifically mentioned the transfer would of course need to go to be gifted to an irrevocable trust so that the celebrity had no rights to alter, amend, or revise their gift as they would if it were to a revocable trust for which they would likely be a trustee in which case it would be includible just as a life insurance policy would be if transfered to a revocable trust but not if properly devised to an irrevocable life insurance trust. Additionally he discussed how it is important that the rights of a celebrity be respected if it was someone who valued their fame and sought the spotlight that it may be used more extensively in the estate while someone who shun the spotlight during life would likely not want the right of publicity used to the contrary after their death although the IRS values the right at its fair market value not taking into consideration how it is intended to be used and a validly executed disclaimer could sometimes make sense he mentioned. A link to his comments can be found here. As there does not appear to have been any estate planning for Michael Jackson and a will cannot even be located yet although the value of the estates right of publicity will be quite extensive and estate taxes are due within 9 months following the date of death. This will cause a potential disaster for an estate which has debts of around a half a billion dollars already, numerous disputes and litigation issues which will need to be resolved and assets worth up to around a billion dollars prior to the value of the right to publicity but with no spouse his estate will receive just a $3.5 million estate tax exemption and while Paul McCartney or someone may buy the Beatles catalog which is the largest estate asset but it is not marketable in the same way that 100 shares of IBM stock would be and liquidating assets within the time period to pay estate taxes could be problematic. The valuation issues concerning some of the assets will also be an interesting situation to deal with as he had some unusual assets.