Those in charge of Prince estate face 'horribly speculative' task of valuing publicity rights
As a special administrator appointed Wednesday to oversee the business affairs of Prince begins tallying up the late superstar musician’s assets, the Internal Revenue Service will be among those awaiting the results with keen interest.
That’s because the future marketing of his name, likeness and image may be his most valuable asset—to which a 40-percent estate tax may apply—and there’s no clearcut formula for determining how much these publicity rights are worth, according to the Wall Street Journal (sub. req.).
Currently, a trial is looming in a landmark estate-tax battle over the value of the late Michael Jackson’s name and likeness. Due to scandals prior to his 2009 death, those in charge of his estate initially valued the publicity rights at $2,105, the newspaper reports. But the IRS valued the King of Pop’s posthumous image at $434 million.
“This could be very ground-breaking,” said Jonathan Blattmachr, a retired onetime estate-tax practice chair at Milbank, Tweed, Hadley & McCloy, of the pending trial.
The issue is how much Jackson’s image was worth at the time of his death, not later on, attorney Howard Weitzman, who is representing the estate, tells the Hollywood Reporter.
Regardless of who wins, however, the case may not offer much useful guidance concerning valuing Prince’s image, because the facts and circumstances will vary, Blattmachr told the WSJ.
“Michael Jackson will be different from Prince who will be different from Madonna,” he said. “It’s horribly speculative as to what the value is.”
A better approach, he suggests, would be to eliminate estate tax on the estimated value of a celebrity’s publicity rights, but tax future earnings at the ordinary income rate.
Related material:
ABAJournal.com: “Prince died without a will, his sister says in court filing”
CNN: “Special administrator appointed for Prince’s estate”
Stout Risius Ross: “The Right of Publicity: An Often Overlooked Asset in Estate Planning”
See also:
ABAJournal.com: “Widow of author Tom Clancy battles lawyer over $6M in estate taxes”
