Federal Estate Tax Consequences of the Rights of Publicity Legislation

Mitchell M. Gans (Steven A. Horowitz Distinguished Professor of Tax Law, Hofstra University School of Law; Adjunct Professor, New York University School of Law), Bridget J. Crawford (Associate Professor of Law, Pace Law School) & Jonathan G. Blattmachr (Attorney at Law, Milbank, Tweed, Hadley & McCloy LLP), have recently published their article entitled Postmortem Rights of Publicity: The Federal Estate Tax Consequences of New State-Law Property Rights. This article was posted in the Pocket Part of an online companion to The Yale Journal on April 1, 2008.

Here is the introductory paragraph to their article:

California recently passed legislation that creates retroactive, descendible rights of publicity. The New York State Assembly is poised to enact similar legislation. Legal recognition of postmortem rights of publicity permits a decedent’s named beneficiaries or heirs to control (and financially benefit from) use of a deceased personality’s image and likeness. Legislators, proponents of these laws, and legal commentators have overlooked two significant federal estate tax consequences of these new state law property rights. First, a descendible right of publicity likely will be included in a decedent’s gross estate for federal estate tax purposes. Second, the estate tax value of rights of publicity easily could exceed the estate’s liquid assets available to pay taxes. These tax concerns could be eliminated, however, by rewriting the statutes to limit a decedent’s ability to control the disposition of any postmortem rights of publicity.