Michael Jackson’s Estate Battle Raises an Interesting Estate Planning Question

As I have previously discussed, the Jackson Estate is arguing thatthe IRS has overvalued Michael Jackson’s assets. The estate’s petition did notinclude any dollar amounts. Tax lawyers are claiming that the lack of dollaramounts could mean large differences in the estate taxes paid and what isallegedly owed. The dispute turns on some assets that are difficult tocalculate value for tax purposes such as Michael Jackson’s “image andlikeness.” The penalties for under valuation is as high as 40 percent.

Documents released in litigation revealed theheart of the dispute was Michael Jackson’s “image and likeness”. Theestate is valuing his image at $2,105 while the IRS’s valuation was over $430million. As a result, the IRS claims that the Jackson estate owes more than$700 million in tax penalties. This case has made Attorney’s think about estatevalue and the inclusion of the image and likeness factor. Attorney Matt Kadishfrom Kadish, Hinkel & Weibel in Cleveland stated he ““unaware of anycases to date that have addressed whether the value of a person’s image rightsare subject to estate tax, and if so, how to value them.”  This may raise major concerns for estate planners that had not included image and likeness as part of a taxable estate because the IRS without precedent has decided to include it. 

See Alexander Ripps, Protests Surge as IRS Sets Jackson Image at $430 Million: Taxes, Bloomberg, Sept. 10, 2013.