Don't Stop 'Til You Pay Enough

I previously blogged about the income earned by Michael Jackson's estate since his death.  His estate is now embroiled in a dispute with the IRS over the value of his estate and the commensurate estate taxes owed.  His estate representatives claimed a total estate value of $9 million on his estate tax return while valuing his image and likeness at only $2,000, while the IRS values the image and likeness at $434 million and the total estate at more than $1 billion.

Several points:

1.  This issue is different than paying income taxes on the earnings since his death.  Those taxes have presumably been paid.

2.  The IRS valuation seems very high while the estate value seems too low.  MJ had borrowed extensively prior to his death to support his lifestyle, including his zoo, and was planning  a series of London concerts to pay off the debt.   The debt would reduce the value of his estate by $500 million or so.

3.  I would love to negotiate with the estate and buy the right to market MJ's image at their stated value of $2,000.

4.  Estate taxes are levied on the value of assets at the time of death. At the time of his death, MJ was not listed as a billionaire by Forbes, had not had an endorsement since 1993,  and was not on Forbes' list of top earning musicians in 2008 the year prior to his death.  No one could predict how popular he would be in death.  Child molestation rumors, erratic behavior, dangling babies from balconies, and continual disfiguring plastic surgery have a way of frightening advertisers, shrinking a fan base, and reducing earnings.

5.  The Police earned $115 million in 2008 and were Forbes top earning artist of the year. Huh?

Going for a Touchdown When a Field Goal Would Have Sufficed

Jim Carlen was one of the winningest football coaches at the University of South Carolina.  His children from his first marriage, which ended in 1980, are suing his 2nd wife of 29 years alleging that she influenced him to leave all of his estate to her. 

His 2007 will and all prior wills had included the children from his first marriage.  The 2010 will, executed one year after he was diagnosed with dementia, left everything to his widow.  In 2011, he executed a power of attorney in favor his wife which she purportedly used to transfer assets to herself prior to his death 

Several points:

1.  A will executed by an individual diagnosed with dementia that substantially changes his estate plan will always be challenged by the beneficiaries of the prior will.

2.  The coach could have provided for both his widow and children by leaving assets to her in a trust and having them distributed to the children upon her death.

3.  Proving that pigs get fat and hogs get slaughtered, the widow would have been better off ensuring that the children received something rather than seeing them disinherited entirely.

4.  45 wins constitutes the third most wins at South Carolina?  That might explain the one conference championship it its history.         

Mubarak and Marshall

Anthony Marshall, the 89 year old son of Brooke Astor, was paroled from prison after serving 8 weeks of a 1 -3 year sentence for stealing millions from his socialite mother when she was suffering from Alzheimer's.   Mr. Marshall’s health problems include Parkinson’s disease and congestive heart failure. His lawyers said recently that he could not walk, stand, clean himself or dress himself and had potentially life-threatening swallowing issues. One of the issues for Mr. Marshall was whether he should have been incarcerated at all given his age.   

Estate planning lessons?

I am not really certain.  Stealing from a disabled mom is obviously a bad idea and is subject to punishment. Beyond that?   Incarcerating an 89 year old seems unwise although given the amounts involved it was probably necessary.  The early release seems humane. If Egypt can release former president Mubarak this week, NY can certainly release Mr. Marshall.