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For most of us, our estates consist of our assets and belongings. So, when determining whether estate taxes are owed at death, the values of our financial accounts, real estate, and tangible personal property (things like vehicles, artwork, and jewelry) will be added together. For celebrities though, there is another component which must be valued: Intangible property including likeness and image.
The Tax Court recently held that the value of Michael JacksoMin’s image and likeness was $4,153,912. That sounds like a lot of money, but it’s significantly less than the value the IRS claimed it was worth – a staggering $161,307,045 – and significantly more than the value the estate originally claimed it was worth, a mere $2,105.
The superstar’s image and likeness fall under the “Right of Publicity” laws in California, which the tax court stated was the “right to control the commercial use of one’s identity.” The tax court was clear that the value ascribed to Jackson’s image and likeness are includable in his gross estate, but disagreed with the assertion by the IRS that the value exceeded $161 million, reasoning that the IRS incorrectly included in its value U.S., state, and international trademarks, copyrights, licensing rights, endorsement rights, and franchising rights, when these items are not includable in the definition of Right of Publicity under California law.
The court also held that the value of Jackson’s likeness and image was negatively impacted by various legal and moral issues surrounding Jackson’s reputation in the later years of his life, finding that it was unreasonable to project a higher revenue source to Jackson’s heirs for his likeness and image because of his poor reputation.
While most people do not need to concern themselves with their “Right of Publicity” values for their estates, it is important to understand the assets that make up your estate, so you can plan proactively. Contact The Estate Planning & Legacy Law Center to learn more!