Legendary soul singer Marvin Gaye was shot dead by his father April 1, 1984 at the home they shared in Los Angeles. While Gaye’s name may not be as recognizable to younger listeners as Michael Jackson or Prince, both of those singers followed in his footsteps, and Gaye recorded a string of legendary albums and #1 hits throughout his life.
As a result, Gaye made a lot of money during his life, but he also spent a lot of it. He went through a costly divorce and battled drug addiction, and even moved outside of the country for a period of time to avoid the IRS. When Gaye died in 1984, he left behind $9.2 million in debt, much of it money he owed to the IRS. He also died without a will. When a person dies without a will in California, this means that the California intestacy rules kick in, and, in this case, Gaye’s children became owners of the estate.
An Estate Drowning In Debt
With $9.2 million in debt, this obviously left nothing immediate in the hands of the three teenage children whose 45-year old father had just died. The estate did own the publishing rights to Gaye’s music, however, but, in the deal worked out in court following Gaye’s death, the federal government (as the chief debtor of the estate) received the first $1 million that the estate earned every year from the rights, which left the children very little according to a lawyer for the estate.
The lawyer managing the estate continued to put hard work into finding ways for the estate to be profitable. At one point, the estate sold off the rights to make a movie based on the life of Gaye for several million dollars, although no movie has been yet made. Then in 2000, the estate issued bonds based on the future value of the publishing rights of Gaye’s songs.
The Estate Becomes More Profitable Than Ever
By 2008, Gaye’s estate made $3.5 million in one year, making his estate the 13th most lucrative estate among deceased celebrities that year (joining him with perpetual moneymakers such as Elvis Presley, John Lennon, Marilyn Monroe, and Kurt Cobain). Then, just last year, the Gaye estate scored what was likely its biggest financial win ever when it sued the writers of the song “Blurred Lines” by Robin Thicke for copyright infringement on Gaye’s 1977 song “Got to Give it Up” and won $7.4 million for Gaye’s estate, which, now profitable, is distributed to his children as heirs.
Lessons Learned From Gaye’s Estate
Marvin Gaye’s family had a happy financial ending, but for at least the first decade after his death, his children who were in their teens and twenties suffered due to poor financial planning. Obviously, Gaye should have had someone responsibly in charge of paying taxes to the IRS so that the debt did not add up in the first place, but aside from that there were other actions he could have taken to take care of his family.
By creating a will, he would have helped set up an orderly distribution of property and method to deal with debts, thus preventing his family from having to go to court and pay high lawyer bills to get their interests sorted out. Furthermore, he may have been able to set up estate planning instruments to take care of the financial needs of his children which would have protected the children from having creditors take the funds that would likely have been intended for them had Gaye taken the time to invest in estate planning.
If you would like to speak with an attorney who can help guide you through the benefits of estate planning, contact Pasadena Estate Planning attorney Christopher Johnson today.