The late Robin Williams’ estate plan provided for his “image rights” to pass to a charitable organization that he set up and prohibited these image rights from being used for 25 years after his death. While we are not sure of the exact reasons Robin Williams decided to prevent anyone from using his image for profit or otherwise, it is a good guess that at least one reason was the desire to prevent a huge Estate Tax bill from the IRS. According to the below article, Michael Jackson’s Estate is still fighting with the IRS over Michael’s image rights which the IRS says created additional Estate Taxes of $500 Million and incurred an additional $200 Million in penalties. The likely goal of Robin Williams’ planning was to avoid any Estate Tax on these image rights by having the value of his image rights lowered and then to have this lowered value qualify for the Estate Tax charitable deduction.
The technical question I have on this strategy is if the prohibition from using the rights for 25 years will be effective for Estate Tax valuation purposes? If yes, the strategy will work and no Estate Tax will be owed on these image rights. But if not, then the Estate could end up being whipsawed by being required to pay Estate Tax on the full fair market value of the image rights, but will only get a partially offsetting charitable Estate Tax deduction on the lower value of the image rights beginning in 25 years. Time will tell how this all works out.
Richard M. Morgan