One of the biggest celebrity fortunes looks relatively simple to distribute. Good estate planning means the heirs can concentrate on mourning, the funeral and the lingering medical questions.
Joan Rivers went out at the top of her game, leaving behind what the wealth rankings estimate is around $290 million for her heirs.
From all accounts, settling the estate will be relatively easy. Daughter Melissa probably gets just about everything.
But the details can make a huge difference, and it’s clear from the chatter about funeral arrangements that Joan was detail-oriented to the end.
Now that the funeral is over, the only mission-critical issues left on the table revolve around whether her medical team was paying as much attention as her estate planners.
It’s close to an optimal scenario, but the details definitely matter with a fortune this big and a star this bright. Let’s hit them one by one.
Cutting through the jokes
As Joan said, “yes, Melissa, everything’s in your name.”
Barring what looks like a “small” pet trust or other arrangement to care for Joan’s two dogs, that sounds like every cent actually does go to Melissa.
There weren’t any divorce settlements or blended families to worry about. Joan never remarried after the legendary Edgar killed himself in 1987, and grandson Cooper is too young to inherit in his own name.
That makes things really simple. Maybe there’s a philanthropic bequest or two, but it doesn’t sound like it.
As a result, Melissa was free to concentrate on the funeral arrangements without having to worry about money-hungry relatives crawling out of the woodwork.
It’s pretty close to an ideal outcome, and while those arrangements sound fantastic, the ceremony also demonstrates that there’s a wide gap between Joan’s throwaway gags and the estate planning wishes she laid down in private.
Joan joked about some kind of gala open casket viewing with wind machines, the best make-up in human history, a buffet spread.
All those laugh lines made it into the program, but the real event was invitation-only, with bagpipes, show tunes and a red carpet. Every detail seems planned out to focus on what would have made her happy.
And the details of what “in your name” entails might be no joke at all.
The ultra-luxury Manhattan triplex apartment looks like it was still Joan’s property even though she had been halfheartedly trying to sell it over the last few years.
She was, after all, president of the condo board and listed on public records as the owner.
Truly transferring ownership of the property to Melissa would have subjected her to the capital gain on what might turn into a $25 million to $30 million sale.
Although this is prime Upper East Side, remember that Joan moved in back in 1987. It’s fair to say property values have moved up, and exposing Melissa to that differential by making her the owner would only hand her a larger IRS bill.
Keeping the residence in Joan’s name reduces the taxable basis for her heirs to market value – and of course, transferring it to a revocable trust would have eliminated probate questions as well.
It’s unlikely the condo board would have put up with anything more elaborate. Even if so, calculating “rent” on a unit Joan once described as the kind of place Marie Antoinette would have lived “if she had the money” might have rendered specialized qualified personal residence trust (QPRT) planning moot.
So all in all, the best and most likely scenario is probably that the apartment was not actually in Melissa’s name, but in a trust of some form.
Where’s the money?
Likewise, while Melissa may be a partner in Joan’s production company, fashion ventures and other business entities, Rivers herself remained the principal of record.
A good succession plan would have triggered when her heart stopped last week, which might have involved a transfer of formal power and ownership.
We don’t know about that. Right now, the family reality show is shut down and may never shoot another episode.
As for what seems to be a comfortable nest egg of $260 million in equity and other investments, it’s a little unlikely that a lot of that money was outside Joan’s estate.
She was a working star who built most of her fortune through endless shopping channel promotion, book deals, talk shows.
A career like that is more about current income over six decades in show business and less about one big gift to a trust that appreciates over the long haul.
And little gifts of current income hits the gift tax limit remarkably quickly when you end up with $290 million in total to play with. Even $5 million transferred into a trust when Edgar died in 1987 and invested in the broad market might only represent $30 million of Joan’s holdings today.
Most of the money has got to be left in Joan’s estate. Maybe the lawyers end up paying the IRS $90 million to settle the accounts.
Maybe the joke about Melissa getting everything was just a joke and there are massive bequests to lower that bill – but in that event, those dollars still leave the family.
It’s not like Melissa and Cooper are going to starve either way. And if Joan wanted to skirt taxes, she probably wouldn’t have lived in New York in the first place.
Her priorities seem pretty clear. She had to bury a husband under especially uneasy circumstances, so she was focused on making sure Melissa had the clarity and support to handle everything required.
The estate plan is probably tighter than the funeral instructions. If so, she paid every dollar of tax she wanted to pay.
Right now the family is working with the authorities to figure out how exactly an 81-year-old got full anesthesia for a routine outpatient procedure and never woke up.
Odds are good that if Joan had handled the details, there might have been some “laughing gas” gags but she would have come out looking and feeling fabulous. You know she couldn’t resist an opportunity for a little work.