Few artists are as determined to control the rights to their creative work as Prince was, making the fact that he apparently died without a will astonishing. An estate plan would have appointed his heirs and given clear directions about the use of his music and real estate, and avoided the uncertainty that now surrounds the management of his massive, multi-million-dollar estate. As the situation continues to unfold, music attorney Daniel K. Stuart outlines some basic steps that artists, songwriters and performers can take to protect their assets and would-be heirs from suffering a similar fate.
1. Hire a Good Trusts and Estates Lawyer — and a Good Music Attorney. They can work together to integrate entertainment assets into an estate plan. Neither will be cheap, but the money will be well spent. For larger estates, a tax attorney is also recommended.
2. Create a Last Will and Testament. This instrument appoints the executor of the estate, names childrens’ guardians and outlines how assets will be divided (to the extent that distribution is not otherwise governed by a living trust). Be sure to designate alternates in case the appointed trustee or executor dies, becomes incapacitated or declines to accept the role’s responsibilities.
3. Consider a Living Trust. This instrument provides for a trustee to hold the legal possession of assets to manage and ultimately distribute them. (A living trust may not be necessary for a married person without children who isn’t yet wealthy.) Also, explore using a “No Contest” clause in the Will or Living Trust. This device essentially disqualifies any heirs from receiving assets if they contest the Will or Living Trust and, where enforceable, can be an effective deterrent against a rogue heir interfering with a carefully constructed estate plan.
4. Create an Advanced Health Directive and a Durable Power of Attorney. The former document provides health care instructions in the event a person becomes incapacitated. (Otherwise, such instructions will be determined by relatives or by doctors.) The latter document appoints a trusted person to make health care and financial decisions in the event of the person’s incapacitation.
5. Manage Your Bank Accounts and Insurance Policies. Make sure that all beneficiary forms for retirement accounts and insurance policies are in order. Investment and bank accounts may require a “POD” (payable on death) or “TOD” (transfer on death) form to make sure heirs get access to money upon the account holder’s death.
6. Appraise Intellectual Property Assets. Catalogs of copyrighted compositions, sound recordings and celebrity name, likeness rights and other intellectual property can have considerable value so it is helpful to have that value appraised and updated from time to time.
7. Create an Information Outline. The trustee and/or executor will need to know where to find important documents as well as account numbers and contact information (and logins and passwords) for such items as insurance policies, bank accounts, investment accounts, safe deposit boxes, smartphones, tablets and computers. All of this information should be collected in one integrated document and held by the trusts and estates lawyer.
by Daniel K. Stuart is a partner with King, Holmes, Paterno & Soriano in Los Angeles. Published on Billboard Magazine’s website 8/8/2016.
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