Everything has a price, sure, but everything also has an expiration date. A tomato may cost a dollar today but next week it will be worth nothing. Ten years ago a pair of raw denim skinny jeans might have sold for $200; nowadays you couldn’t pay anyone under 30 to wear them. Tastes change and with them, the value of certain items. This concern is what is driving a surging number of musicians to sell catalogs and cash in on capital gain now, while there is still capital to be gained.
Who’s Cashing In and Why Now?
In 2021 Bob Dylan turned 80 and in apparent celebration of reaching this landmark, he completed the liquidation of his song catalog, master recordings, and personal archive. A multinational conglomerate reportedly made the purchase for a sum upwards of $650 million, leaving the musical genius with little to worry about in his much-deserved retirement.
Dylan is joined by Bruce Springsteen, Paul Simon, Sting, Stevie Nicks, and numerous other luminaries who have all cashed in on their life’s work for nine-figure sums and the timing of these sales is no coincidence.
Capital gains tax is very favorable at the moment and all of the musicians named remain household names with enormous followings. Bob Dylan is familiar to billions worldwide, but this won’t last. Future generations won’t value his visionary talent in the same as those of the present which means there has never been a better time to reap the rewards of his career.
It’s Not Just About Capital Gains
While favorable capital gains tax and advantageous timing are influential factors, top musicians are also selling their catalogs for another important reason: estate planning.
Music is a messy asset. It’s not predictable or marketable in the same way as say fine art is. A Van Gogh is a simple, if not delicate asset to manage. Songs, on the other hand, are not. Without active marketing, pitching, re-issuing, and so on, a musical catalog loses value. Mistinguett’s song repertoire is a perfect example.
Who? You ask.
Exactly.
(Mistinguetts was a French actress and singer and at one time the highest-paid female entertainer in the world.)
Dylan, Springsteen, Simon, and their contemporaries are selling their catalog because money earned in the form of capital gains will be easier for their heirs to manage and maintain.
How Does This Concern Me?
The common misconception that estate planning is only for the rich and famous arises because such people are so often held up as examples.
Want to know why you shouldn’t die intestate? Look at Prince.
Wondering if a holographic will is a good idea? Read up on Aretha Franklin.
What do you need to know about capital gains? Well, let me tell you about Bob Dylan…
That musicians are cashing in on their catalog is relevant because it illustrates the importance of strategic financial management in estate planning. You may have assets of significant value, but this doesn’t matter if your loved ones won’t know how to maintain these assets when you’re gone.
Your best option may be to sell tax-advantaged, complex assets now. However, it might also be to design an asset-management plan your heirs can follow in your absence.
Only an experienced estate planning attorney and financial management professional can tell you which is true of your case.
To learn more about managing your assets in the best way for both you and your loved ones, do not hesitate to reach out to the Deliberato Law Center either by calling us at (216) 341-3413 or using the contact form on our website.
Contact the Estate Planning Attorneys at Deliberato Law Center
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