The Allure of Lists
The Allure of Lists
From the wealthiest people to famous figures who have passed away, Americans love lists. Whether we’re intrigued by ranking systems or have shorter attention spans, lists dominate media, especially online. They range from useful and entertaining to pure clickbait.
One source of endless lists is Forbes, which started its famous rankings of America’s wealthiest in 1982. Today, it hosts lists of billionaires, top-paid athletes, self-made women, and more. One of the most fascinating lists, though, is the “Highest-Paid Dead Celebrities,” showing how fame and wealth continue even after death. Our post Avoiding Expensive Surprise Tax Bills: What You Need to Know dives into unexpected tax burdens that arise from inheritance, similar to the taxes on these estates.
2024's Top-Earning Deceased Celebrities
Forbes' list for 2024 shows Michael Jackson as the top posthumous earner with a remarkable $600 million. Freddie Mercury is second, earning $250 million, and Dr. Seuss ranks third with $75 million. Newcomer Matthew Perry rounds out the list at number nine, thanks to royalties from Friends, bringing in $17 million.
While these stars aren’t personally collecting earnings, their estates are managing the wealth. However, this raises an important question: what happens to a celebrity’s wealth after death, and how does taxation affect their legacy?
Estate Planning and Taxation for Celebrities
For celebrities who prepare estate plans, assets like royalties and residuals are designated to specific heirs or placed in trusts. This strategic planning allows income-generating assets to transfer to family members or trusts, avoiding unnecessary tax complications. However, these estates can still face hefty estate taxes. Our blog post on Top 12 Ways to Plan Taxes for a Construction Business discusses strategies that business owners can use to protect their assets and income—principles that apply to anyone with valuable assets to leave behind.
For instance, Michael Jackson’s estate had a famous tax dispute with the IRS over the valuation of his image rights. While his estate initially valued his image at a mere $2,105, the IRS appraised it at over $434 million. A protracted legal battle finally concluded with a $4.15 million valuation, saving his estate over $170 million in taxes.
The Consequences of Poor Estate Planning
Not every celebrity is so proactive. Celebrities like Prince, Aretha Franklin, and Chadwick Boseman passed away without wills, leading to prolonged court battles and delays in distributing assets. Without a will, assets are held in estate accounts while courts determine inheritance rights, creating potential tax complications.
In cases like Jim Morrison’s, where assets end up with unintended heirs due to lack of planning, the consequences can be especially severe. Without strategic planning, estate assets may be tied up in court battles and go to unintended beneficiaries. Our post on the 10-T Election for Real Estate Investors emphasizes the importance of proper planning to ensure assets transfer smoothly and tax obligations are minimized.
Why Estate Planning and Smart Tax Strategies Matter
At Anvil Tax, we understand the value of proactive tax planning. David Tuck, Ex-IRS Auditor and Portland Financial Consultant, is here to help clients navigate the complexities of estate planning, from ensuring assets are protected to minimizing tax burdens. Beyond just balancing numbers, our firm identifies potential tax savings that can preserve wealth for generations to come.
If you’re ready to take control of your financial future and protect what you’ve built, schedule a Right Fit call with us to discuss how our tax planning services can support your goals.
Explore More
Want to keep learning? Check out our next video: Double the Trouble, Double the Opportunity, where we dive deeper into tax planning strategies and their impact.