When a popular singer passes away, fans in Georgia and around the world might be moved to purchase digital or other forms of that person's recorded works. However, this issue has come into play as the estates of such deceased celebrities have been saddled with hefty tax bills. A spike in sales of music and memorabilia might support the idea that celebrities are more popular and valuable after their death. A related dispute about valuation occurred with Michael Jackson's estate and is becoming an issue in the case of Whitney Houston as well.
The disputes over such valuations are related to various rights held by performers at the time of their death. In the case of Houston, the IRS valuation of her music catalog is said to be $9 million too high. Her estate indicates that the IRS has overvalued her publicity rights by more than $11 million as well. Between these two areas, the IRS has indicated that approximately $11 million in estate tax is owed. Approximately $3 million of that amount represents penalties. However, the method used to compute this amount has not been made clear.
This is similar to the matter involving the Jackson estate as the IRS valued his publicity rights at more than $430 million. Those involved in the entertainment industry may find that it is important to consider this trend as they revisit their estate planning strategies.
Estate taxes are frequently considered by individuals and families as the management of assets in later life is addressed. In many cases, trusts are used to structure the disbursement of funds to heirs to limit the loss of value through estate taxes. However, tax laws can change over time, which makes a regular review of these documents by an attorney advisable.