Celebrities captivate us. Some are good role models who live exemplary lives and inspire us to emulate them. But unfortunately, big fame often leads to self-destructive behavior. The self-destruction of rock stars is nothing new. In fact, it was the subject of my daughter Lizzy’s thesis at New York University titled “Archetypes and Antecedents of the Rock Star.” Lizzy studied cases of famous lives who imploded over the centuries, and she drew parallels about fame contributing to their downfalls. The estate planning world is replete with rock stars whose messy lives carried on after their deaths, leaving behind messy estates. Let’s turn their sad stories into teachable moments.
I recently posted about the Queen of Soul Aretha Franklin’s estate planning disaster. After five years of battling by her four sons, a Michigan court declared Aretha Franklin’s notebook scribbles (found months after her death, buried under couch cushions) to be her Will. In leaving behind a mega-sized mess, Franklin is in the company of many of her entertainment colleagues. Let’s learn lessons from the estate fiascos of three other rock stars: Elvis Presley, Prince, and Michael Jackson.
I’ll begin with “The King,” Elvis Presley, truly a gift that keeps on giving us estate planning lessons. At his death in 1977, Elvis left an estate of roughly $5 million. “His spending had drained his earnings, which had long been limited by his business arrangement with this longtime manager Col. Tom Parker.” In desperation, Elvis had even sold future royalty rights from his recordings to RCA for $5.4 million, half of which went to Colonel Parker. Elvis’s estate went into a trust for daughter Lisa Marie, with her mother Priscilla Presley as a trustee. Lisa Marie began what “her lawyers have called her ‘11-year odyssey to financial ruin.’” Co-trustee Barry Siegel explains that “‘Lisa’s continuous, excessive spending and reliance on credit’ drove it into significant debt.” Consequently, the family today owns only 15% of Elvis Presley Enterprises, which operates Graceland (Elvis’s Memphis home).
Lisa Marie died on January 12, 2023, at age 54, estranged from her mother. Following her daughter’s death, Priscilla discovered that in a 2016 document Lisa Marie removed Priscilla (as well as Siegel) as co-trustees, replacing them with Lisa Marie’s daughter Riley Keough (age 33), son Benjamin Keough (who died by suicide in 2020 at age 27), and twin girls Finley and Harper Lockwood (age 14). Priscilla filed a petition challenging the 2016 amendment, as she failed to receive notice while Lisa Marie was alive (as required by the trust), her name is misspelled, it was neither witnessed nor notarized, and she questions the authenticity of Lisa Marie’s signature. Just recently, Priscilla and her granddaughter Riley have reached a settlement whereby Riley will serve as sole trustee and Priscilla will be a “special adviser” to the trust for an undisclosed annual amount. Although the Elvis brand takes in more than $100 million a year, the Presley family receives only 15%. It’s a shame that Elvis’s music legacy continues to be marred by financial disasters, even decades after his death. Lesson: it’s critical to select the right trustee. Imagine if Elvis had named a professional trustee with the skills to manage this situation prudently.
Let’s turn now to another “King,” the “King of Pop.” Michael Jackson’s popularity has soared since his death in 2009 from a fatal overdose of propofol and lorazepam. Based on his rising post-mortem fame, the IRS challenged his estate’s claim that at the time of his death, Jackson’s name and likeness was worth only $2,105. The IRS asserted the publicity rights associated with Jackson’s image were worth $434 million. On this issue, the Tax Court largely sided with the estate, valuing that asset at only $4.15 million. The court held that post-death success was irrelevant, as the value depended on Jackson’s reputation at the time of his death, when he was at a career low. The estate asserted “that his image had been rendered all but worthless by stories about skin bleaching, his obsession with plastic surgery, prescription drug abuse, odd parenting choices—such as covering his children’s faces in black veils or Spider-Man masks in public—and allegations that he molested young boys who visited [his home] Neverland.” Furthermore, he owed $500 million, was on the verge of bankruptcy, hadn’t filed personal income taxes in three years, and more than 60 creditors surfaced claiming he owed them money.
The Michael Jackson IRS tax case hung over the heads of his children until it was finally resolved in 2021, some 12 years after death. In a 271-page opinion, Tax Court Judge Mark Holmes grappled with the issues. “At the peak of his career, Jackson was one of the most famous people on Earth, with some of the most popular records ever released. And since his death, he has been one of the world’s top earning celebrities…. But the tax case turned on the value of Jackson’s public image at the time of his death. His reputation had been badly damaged, and since 1993, Judge Holmes noted, Jackson had no endorsements or merchandise deals unrelated to a musical tour or album.”
Although Jackson’s estate prevailed on the value of his image rights, other famous people should take note. In doing their estate plans, celebrities need to pay attention to Jackson’s “name-and-likeness fight” and recognize that his case “has tax-planning consequences for any actor, musician, politician, or athlete famous enough to earn beyond the grave.” Such is the “toughest issue” in the estate of Prince. “Estate-tax attorneys for Prince…must attempt to put a precise financial value on his name, image, and likeness…. The estate-tax challenge is setting a cumulative value on Prince’s profit potential on the day he died.” Indeed, Prince’s estate went to war with the IRS, as the government asserted that his estate was worth double what the estate’s administrator reported ($163.2 million vs. $82.3 million). They finally settled on a $156 million valuation.
Prince died in 2016 from a fentanyl overdose, setting up not just the IRS war, but also a six-year battle over who would inherit his estate. Why? Because, remarkably, Prince died without a Will. More than 45 people reportedly came forward as potential heirs to the estate, with many claiming to be a wife, child, sibling, half-sibling, or other relative. Suffice it to say it’s been a circus at the courthouse.
In stereotypical fashion, Prince lived a turbulent life. “Like his character in Purple Rain, ‘The Kid,’ Prince clashed with his father.” A young Prince even had to move out of his family home and live with a friend, to get away from his father. “Prince’s relationship with his family was never simple. His parents had children from several marriages, and over the years these eight brothers and sisters fell in and out of favor with their famous family member.” By leaving no Will, it’s highly unlikely Prince’s wealth passed into the hands he intended.
The obvious lesson from Prince’s death is to create a Will. In her Washington Post article “Don’t Do Your People Like Prince Did. Leave a Will,” Michelle Singletary puts it bluntly: “If you don’t have a will, you are being selfish and irresponsible. I know. I’m being harsh. And I mean to be.” She continues: “But get over your misgivings and stop procrastinating. This isn’t just about you…. Prince opens [“Purple Rain”] by saying, ‘I never meant to cause you any sorrow. I never meant to cause you any pain.’ Well, what do you expect will happen when you die not having taken care of your business? Your love song to your family should be your own will.”
Singletary says it so well and persuasively, I won’t even try to improve on her words. Let’s learn from the mistakes of these rock stars and get our estate plans in order.
Marvin E. Blum
Sources:
- Matt Stevens, As a Film Revives Elvis’s Legacy, the Presleys Fight Over His Estate, N.Y. TIMES, Mar. 9, 2023.
- Devin Leonard, Michael Jackson Is Worth More Than Ever, and the IRS Wants Its Cut, BLOOMBERG, Feb. 1, 2017.
- Ben Sisario, Michael Jackson’s Estate Is Winner in Tax Judge’s Ruling, N.Y. TIMES, May 3, 2021.
- Richard Rubin, What Is Prince’s Legacy Worth? The Tax Man Wants to Know, WALL STREET JOURNAL, Apr. 27, 2016.
- Keith Harris, Prince’s Heirs Apparent: A Look at the Siblings Who Stand to Inherit His Fortune, BILLBOARD, May 11, 2016.
- Michelle Singletary, Don’t Do Your People Like Prince Did. Leave a Will, WASHINGTON POST, May 3, 2016.
- Matt Stevens, Riley Keough to Pay Priscilla Presley to End Family Trust Dispute, N.Y. TIMES, Jun. 13, 2023.
- Chloe Melas and Alli Rosenbloom, Lisa Marie Presley Leaves Behind a Music Fortune and a Family Dispute, CNN, Feb. 3, 2023.
- Anousha Sakoui, Priscilla Presley Agrees to Settlement in Dispute Over Lisa Marie Presley Estate, L.A. TIMES, May 16, 2023.
- Ben Sisario, I.R.S. Says Prince’s Estate Worth Twice What Administrators Reported, N.Y. TIMES, Jan. 4, 2021.
- Adrian Horton, Prince Family and Advisors Settle Distribution of Singer’s $156M Estate, THE GUARDIAN, Aug. 2, 2022.
- Daniel Kreps, Prince Estate: Sister, Five Half-Siblings Named Heirs, ROLLING STONE, May 20, 2017.
Elvis Presley, Prince, and Michael Jackson lived messy lives and left behind messy estates. Let’s learn from their fiascos.