ArticlesVolume 42, No. 3 (2019)

Publicity Rights and the Estate Tax

Mitchell M. Gans

Rivkin Radler Distinguished Professor in Taxation, Hofstra University School of Law

Abstract

The estate tax treatment of publicity rights factors into the debate regarding whether such rights should be transferrable at death. Some point to the estate tax as a reason for making publicity rights non-transferrable. For if they are transferrable, estate-tax inclusion could result. And, the argument goes, the estate or the beneficiaries could well be coerced into commercializing the rights in order to raise the money to pay the tax. Making them nontransferable would eliminate this possibility. This Article considers some of the connections between the federal estate tax and the state law treatment of publicity rights. It concludes with a suggestion about the tax treatment of publicity rights at a more general level.

Part I explores the estate tax treatment of publicity rights and, in particular, the provision the celebrity Robin Williams used in his will in order to address his apparent concern about forced commercialization. While the provision appears to be based on dicta in the Ninth Circuit, its effectiveness is questionable. This Part concludes with a recommendation that legislation at the state level permit celebrities to extinguish during life their post-death publicity rights. With such legislation in place, the concern about forced commercialization would be eliminated—thus permitting the state law question of transferability to be resolved solely on the basis of non-tax considerations.

Part II considers the characterization of post-death publicity rights as an independent right under state legislation and the estate tax implications of such a characterization. An analogy is made to the estate-tax treatment of wrongful death proceeds, which are typically characterized as independent of the victim’s pre-death claim and are therefore not included in the gross estate.

Part III examines two ancillary estate-tax issues that can arise where state law authorizes transferability: first, the impact of retroactive state legislation making publicity rights transferrable in the case of a decedent dying prior to enactment; and, second, the impact of a movement away from traditional choice-of-law rules in this context.

Part IV concludes with a broader suggestion: that the estate tax be made entirely inapplicable to publicity rights without regard to the state law question of transferability. Instead, the proceeds from the exploitation of these rights would be fully taxable as income to the beneficiaries when received, obviating the need to engage in a difficult, potentially protracted inquiry into the valuation of the rights at the time of death.