The Tom Petty Estate: A Cautionary Tale in Business Succession Planning

When a celebrity dies, the news is usually followed by a recounting of the person’s estate and the people that will be getting a slice of it. For those that fail to perform any estate planning such as Prince and Aretha Franklin, the heirs battle other what they are entitled to and claimants can jump in to try to get the decedent’s debts paid off. But even those that attempt to put together an estate plan, problems can arise and lead to serious litigation between the beneficiaries.

Tom Petty died in October of 2017, and the terms of his trust attempted to direct that his extensive music catalog be placed into a separate trust, called the Artistic Property Entity. His second wife was the trustee of his original trust, but for the second trust her and Petty’s two daughters, Adria and Kim, “shall be entitled to participate equally in the management of the Artistic Property Entity, even though their respective economic interests in the Artistic Property Entity are not equal.” This language has lead to a bit of a misunderstanding of how the management of the Entity should be determined.

The daughters believe that they are holders of a two-thirds majority vote in the entity, they now have effective control over Petty’s music catalog. Petty’s widow argues that a more thorough reading of the trust terms, as well as an understanding of his intent, relays that actions should require the unanimous consent of her and the two children.

Though Petty named who the beneficiaries and parties to the trust are, he did not expressly lay out the controlling parties, and how the trust should operate.

See Charles Lin, The Tom Petty Estate: A Cautionary Tale in Business Succession Planning, TrustBCLP.com, April 9, 2019.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.