Monday, 30 November 2015

Restricting the Usage of a Valuable Asset Post-Mortem: The Robin Williams Trust

Under U.S. wills and trusts law, unlike other jurisdictions, the intent of the decedent is a paramount consideration in the enforcement of restrictions on the disposition and exploitation of assets after death.  In other jurisdictions, courts tend to be wary of attempts by decedents to control valuable resources after their death because of concerns with dead hand control.  Why should the dead be able to make binding decisions on the living concerning scarce and valuable resources?  Isn’t it better for the living to make those decisions in light of current considerations and needs of the beneficiaries?  In the United States, courts tend to view restrictions on alienability of property by beneficiaries not so much as dead hand control, but as essentially conditional gifts.  Absent some other overriding public policy, courts are likely to enforce those restrictions. 

Notably, as discussed recently on this blog here, the right of publicity is a very valuable right in the United States.  Under many right of publicity statutes, it is not just a right a celebrity has during life, but it is a right that can be transferred at death.  There is a viable and potentially very valuable post-mortem right.  For example, California Civil Code section 3344.1 provides in part: “The rights recognized under this section are property rights, freely transferable or descendible, in whole or in part, by contract or by means of any trust or any other testamentary instrument, executed before or after January 1, 1985. . . . An action shall not be brought under this section by reason of any use of a deceased personality's name, voice, signature, photograph, or likeness occurring after the expiration of 70 years after the death of the deceased personality.”  Notably, the Internal Revenue Service (tax collecting authority in the United States) is embroiled in a lawsuit concerning the valuation of Michael Jackson’s right of publicity, among other assets of the estate.  The Internal Revenue Service has claimed “a value of $434,264,000 for Jackson's ‘image and likeness,‘’ and Michael Jackson’s estate claimed a value of $2,105 (Notably, the Internal Revenue Service recently upped the amount of the tax liability!).  As you can imagine, the difference between the tax liability based on the two valuations is enormous.  The difference apparently rests on a disagreement about what post-mortem activities can be used to calculate the value of the estate at death—an apparent ambiguous question under U.S. law that this case may resolve.  

Ordinarily under U.S. trust law, a trust is not published and is usually private.  However, if there is litigation concerning a trust, a trust may be made public.  Recently, the Robin Williams trust was published as an exhibit to litigation concerning a family dispute about the disbursement of some personal property.  The Robin Williams trust attempts to address taxation concerns by leaving Robin Williams’ post mortem right of publicity with his charitable foundation.  This addresses the problem that the estate may have with a huge tax burden at the death of a celebrity that the estate may not have the liquid assets to address.  From the taxation perspective, it appears that the post mortem right is not so much a blessing, but could be a curse for beneficiaries of the estates of celebrities.  

Interestingly, the trust also includes a provision that restricts the exploitation of the right of publicity by the charitable foundation for 25 years from Robin Williams death.  Some commentators speculate that this provision was included in the trust to prevent the usage of Williams’ image in product endorsements or in movies that the William’s may have disagreed with, particularly in the age of digital media.  For example, commentators have pointed to the post-mortem usage of Paul Walker’s digital image in the recent blockbuster Fast and Furious movie.   (But, who doesn't want to see Ms. Doubtfire X?) Notably, the right of publicity in the U.S. is often justified because it provides an incentive for people to develop commercially valuable personas.  However, it is also sometimes justified because of a concern with the right to privacy.  In this particular case, Robin Williams is essentially exercising a form of dead hand control to suppress the usage of his commercially valuable right of publicity.  In the U.S., I have little doubt that courts will enforce the restriction.  However, should we enforce the restriction?  Should we allow this commercially valuable asset to lie fallow for 25 years, particularly when it could be used to benefit a charitable foundation?  Should the foundation be able to challenge the restriction?  For sure, Williams’ intent and right to privacy should weigh heavily in the analysis.  However, he is dead and the "right" trustee may be able to make decisions concerning the exploitation of his right of publicity that may be consistent with Williams' general intent.

For additional commentary and sources, see Audrey G. Young, Use of Foreseeable Post-Mortem Events in Valuing Estate, Estate Planning (April 2015); Eriq Garnder, Robin Williams Restricted Exploitation for 25 Years After His Death, Hollywood Reporter (March 30, 2015); and Natalie Robehmed, Why RobinWilliams Won’t be Making Millions Beyond the Grave, Forbes (October 27,2015). 

No comments: