Many people follow celebrities on social media, buy the products they support, and are dedicated fans of their music, movies, or the sports teams they play for.
Sometimes we worship other people who seem to have more glamorous, fascinating, or more powerful lives than ours. Subconsciously, we may want to be like them. But we often forget that celebrities are just people, like everyone else. They experience happiness, sadness, success and failure.
Public relations specialists create the illusion of glamor and lifestyles that seem perfect to the observer, but in reality, celebrities are full of human flaws.
One of the downsides of being famous is that your mistakes, just like your successes, happen in the public eye. But maybe there is a silver lining in there for the rest of us. Because we can clearly see the consequences of celebrity mistakes, we can learn some important lessons … such as these:
Build, fund your trust
Michael Jackson created a trust before his death in 2009, but for unknown reasons it was never “funded” during his lifetime.
Funding the trust is the process of transferring assets to a trust. You must physically change the titles of your assets from an individual name to that of a trust. Assets funded in a trust will remain private compared to those in an estate that is not in a trust, which must go through probate and become a public matter.
Since Michael Jackson’s assets were not transferred to the trust, a long and costly battle in the California Estates Court ensued after his death to determine control of his estate.
Make a will
Prince Rogers Nelson, the successful musician, artist and record producer known as Prince, died in 2016 without heirs and apparently without a valid will. Forbes estimated the value of his estate at over $ 100 million.
Because Prince has not asserted his right to decide who will or will not inherit the shares of his estate, the courts follow the laws of the state to determine this for him.
Most likely, due to his lack of planning, a considerable amount of money will go to some relatives with whom Prince had little contact and no interest in sharing the benefits of his life’s work.
Live within your means
Mike Tyson’s income at one point in his life reached $ 400 million, but a lavish lifestyle and bad investments drove him into bankruptcy. Tyson once owned fancy cars, expensive homes, a golden tub, and tigers. As fast as the wealth arrived, it was gone. The former heavyweight champion declared bankruptcy in 2003.
At the peak of his career, he could make $ 30 million overnight. When he filed for bankruptcy, he had $ 23 million in debt and $ 13 million in the Internal Revenue Service.
Pay taxes on time
Many celebrities have been in trouble for tax evasion. Aretha Franklin’s estate recently settled a dispute with the IRS over federal taxes on income she owed during her lifetime. The IRS said the singer’s estate owed more than $ 7.8 million in unpaid income taxes, plus interest and penalties over the last seven years of her life.
There was no shortage of drama in the Queen of Soul estate, but the IRS was the most relentless creditor, as a Detroit Free Press article reports.
This year, the two sides reached an agreement in principle on what had already been paid and how much was still owed. The deal should not only speed up the payment of the remaining tax burden, but also finally give Franklin’s four sons some money from their mother’s fortune.
Whether you are a celebrity or not, having a team of qualified advisors – which may include your lawyer, accountant, finance professional, property & casualty agent, and banker – should help you effectively manage and to protect your interests. Members of your finance team should not only have unique abilities and varied areas of expertise, but should also be reliable and trustworthy.
Your advisors must understand your goals and expectations, provide advice, guidance and follow-up as needed, while being alert to any conflicts of interest that may arise. Each team member should have a role based on their knowledge and expertise.
In the celebrity examples mentioned, there were serious planning flaws. Obviously, they had the resources to afford a team of qualified advisers, but something went wrong. Maybe the celebrities weren’t listening or were too busy to take advice from counselors, or maybe the counselors failed to work together to meet the needs of their clients. We will never know.
Learn from the mistakes of others. Remember, life is your private journey, so team up with the best team possible and heed their advice for a successful financial future.
Teri Parker is Vice President of CAPTRUST Financial Advisors. She has practiced financial planning and investment management since 2000. Contact her by email at [email protected]