Lawmakers in Minnesota are acting quickly to pass the PRINCE Act, which is intended to protect one’s – specifically, Prince’s – name, voice, and likeness from unauthorized use for a 50-year period after death. The law is aimed at protecting Prince’s legacy and the right of his estate to control future marketing of and revenues from his music and other artistic media. This pending Minnesota legislation is discussed here: http://blogs.mprnews.org/capitol-view/2016/05/legislature-hurries-to-aid-prince-heirs/.
Interestingly, the IRS and the Estate of Michael Jackson are in the early stages of high-stakes estate tax litigation, and the IRS appears to be basing its case on the value of Jackson’s “name and likeness” property rights under California law at the time of Jackson’s death in 2009. This April 2016 article from Billboard provides some information and analysis of the Jackson estate tax controversy: http://www.billboard.com/articles/news/7340741/michael-jackson-estate-tax-court-battle-irs. Minnesota, evidently, has no corresponding “name and likeness” rights law under its current statutes, and this is what the Minnesota legislature seeks to address with the PRINCE Act, which would be retroactively effective.
In the Jackson Estate matter, the IRS is valuing Jackson’s “name and likeness” rights at over $434 million, while the Jackson Estate valued these rights at $2,105. Jackson died in 2009 when the federal estate tax exemption was $3.5 million and the federal estate tax rate was 45%. If the IRS prevails in its value position, the amount of federal estate tax attributable to Jackson’s “name and likeness” rights could be as high as $195,300,000. If history is a guide, this litigation – or perhaps the valuation issue – could settle before trial, which is set to begin next year. If the matter is not settled before trial, we can expect a juicy valuation battle.
Does the PRINCE Act run the risk of creating a massive estate tax problem for Prince’s Estate by creating a valuable property right – subject to estate taxes – that presently does not exist under Minnesota law? Perhaps the Minnesota legislature sees dollar signs. Minnesota is among the states that imposes a state-level estate tax, and to the extent Prince’s “name and likeness” property rights are codified under the PRINCE Act, these valuable rights would be subject to Minnesota estate tax as well as federal estate tax. Perhaps the Minnesota legislature’s intent is not so nefarious.
In the Billboard article, Howard Weitzman – lead attorney for the Jackson Estate – suggested that the Jackson estate tax matter is “a once in a lifetime” case. If the IRS prevails in that case on the “name and likeness” valuation issue, a similar tax dispute could prove Weitzman’s suggestion to be incorrect. It appears that “name and likeness” property rights are a sword and a shield. Without them, an artist’s work could be exploited after death with little recourse for the artist’s heirs, legatees, and beneficiaries. With them, the taxman cometh.
