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Tax Notes (a publicaion of Tax Analysts)

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The untimely death of Michael Jackson this past June presents an opportunity to reassess some thorny estate tax issues that may arise when a celebrity dies owning valuable intellectual property. Elsewhere we have debated hypothetical, tax-motivated changes to state laws relating to postmortem publicity rights. This article will focus on existing legislation, like California’s, that makes publicity rights both devisable and descendible. Federal transfer taxes are levied on intangible property as well as tangible assets, and therefore apply to intellectual property, including a celebrity’s right of publicity and copyrights retained by an artist in his creations. Using Jackson’s estate as an example, and focusing primarily on publicity rights, we will examine two questions that any estate planner representing a celebrity client should consider. First, how should a personal representative value intellectual property for estate tax purposes? Second, what strategies are available to lessen the estate tax burden associated with some intellectual property rights?



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