All creative minds are unique. But successful artist estates have more than a few crucial business models in common.
If you’re wondering how you can keep your hard-earned royalties as soluble in the long term as your music, check out these important tips from the top-earning artist estates for a legacy that lasts for years to come.
Create a Plan
Estate planning is not anyone’s idea of a good time, but the families of lucrative talents can find themselves in quite a mess if they don’t have some foresight.
Take Prince for example. Because the mega-star had no will at the time of his passing, a fight ensued among his relatives over who was due a portion of the estate. Not only was this infighting a huge legal problem, but it also looks like close to half of the estate’s $200 million will be taken in taxes in the upcoming year. According to Billboard, Prince could have avoided this by setting up trusts for his heirs and donating some of the money to charities. Instead, the estate is looking at forfeiting a 40% chunk to the IRS and 16% going to the state of Minnesota.
Aretha Franklin is another. According to the New York Times, Franklin left no will and no trust through which to dictate the distribution and wishes of her estate. With no will, her assets may go into probate court, which makes all her financial details public record.
Don’t wait to design a plan so your estate is secured in the ways you intend.
Have a Focus
If you think everyone wants a sizable portion of your income while you’re still making music, it can only gets worse once the estate takes over. Narrowing your licensing focus is the best way to deal with this.
Licensing is the lifeblood of any estate. Sync licensing for movies, TV, ads, etc. is the obvious first step, but not the only one. Image rights are equally important. Iconic musicians like John Lennon and Bob Marley represent something much bigger than just their music. The Marley estate has been particularly savvy in this realm, branding Marley’s image on clothing, a popular line of beverages, and a number of marijuana products.
Next, though music might be your game, that doesn’t mean you can’t diversify your estate earnings by investing in businesses relevant to your image. Sean “Diddy” Combs does just this by investing in Ciroc vodka, turning the company’s output from 50,000 cases per year to almost 2 million.
These decisions should have some personal relevance. Yes, they should be lucrative, but they should also have some meaning that goes beyond just the return they provide. What are the causes, products, and brands you can support?
Be ready to say no, a lot. And leave some direction to your estate that limits what you will and will not support going forward. The bottom line is your estate managers can’t say yes to every offer that comes their way. Spreading your licensing too far not only dilutes your lasting relevance, but can siphon profits to those who don’t deserve it rather than going directly to your estate.
Put Together a Team
Just because your family loves you that doesn’t mean they’re best suited to run your estate. You need seasoned pros who know the perils and pitfalls of both the music business and estate logistics in order to fulfill your wishes as well as your family’s needs.
For instance, look at B.B. King’s estate. When the legendary bluesman passed back in 2015, he left behind 15 children by 15 different women, all of whom made a claim on the estate.
Luckily, King had placed his business manager, LaVerne Toney, as the legal trustee of his fortune. The King children argued that a 2007 will and trust substantiated their claims as rightful heirs to the multi-million-dollar estate. But Toney, who is a music business expert, said that she was abiding by a 2014 trust, which did include the children but did not specify a particular amount for each beneficiary.
There’s also the next generation to think about. Someone will have to guide your estate for decades to come, so focus on a team that can protect your business into the future.
Diversify & Divest
It’s critical think beyond just your music when planning a lasting estate.
Though it might sound counterintuitive, divesting in your catalog can also be a brilliant strategy. Courtney Love did just this after Kurt Cobain’s tragic death, allowing Larry Mestel, the CEO of Primary Wave, to purchase around 50% of Cobain’s publishing rights for $50 million.
Royalty Exchange worked with the estate and beneficiaries of famed Sesame Street composer Tony Geiss to divest his songwriting and screenwriting royalties for the benefit of 10 charities he supported, raising $580,000 for them at once.
Keep in mind that your catalog is an investment unto itself and plenty of earnings can be secured by getting smart patrons onboard who realize your work’s economic potential.