David Bowie passing reveals a clever and innovative estate plan
David Bowie’s death has revealed a shrewd estate plan allowing the retention of the rights to his music despite facing financial difficulties in the past.
David Robert Jones also known as David Bowie (January 8, 1947 – January 10, 2016) was a world-renown songwriter, record producer, and singer. His music has spanned many generations and he has sold in excess of 140 million records throughout his career.
On January 10, 2016 David Bowie passed away in his New York City apartment after a battle with liver cancer . He had not made his disease publicly known, and his premature death was shocking to many of his fans. The music industry lost a true talent and pop culture lost an icon.
Soon after his death, his will revealed that he left the bulk of his estate to his wife and two children. The will was originally filed in 2004. According to several sources, his estate is estimated to be worth approximately $100 million.
It also became clear that David Bowie had utilized a unique estate plan to preserve the rights to his music and his wealth. While facing financial difficulties in 1997, David Bowie temporarily sold the potential future earnings of his portfolio for $55 million to the Prudential Insurance Company of America. Bowie gave up his rights to royalty payments for songs in his portfolio for 10 years.
The transaction was done through the use of bonds, also known as “Bowie bonds”, which had guaranteed interest at 7.9%. The interest payments on the bonds were secured for investors and covered by the income from royalties. At the end of the 10 year period, David Bowie was able to cash in the bonds. This allowed him to retain the rights to his music while resuming his rights to all future royalty payments at the 10 year mark.
The way David Bowie’s musical rights and estate were organized is a great example of prudent financial and estate planning. His use of Bowie bonds to reacquire the rights to his music and future royalties allowed him to overcome financial difficulties without losing the rights to his music forever. Furthermore, it ensured that these assets remained part of the estate to be transferred to his family and beneficiaries at the time of death.
Some musicians do not have even a will in place at the time of death. I’ve written several entries about Jimi Hendrix who passed at age 27 without a will in place. Consequently, the Hendrix estate has been involved in litigation for several decades. David Bowie avoided these problems and the estate planning strategy he pioneered has been applied by many other musicians facing financial difficulties.
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