Estate planning or lack thereof, affects us all, regardless of age, wealth or our place in society. For example, Meat Loaf, an American rock singer, died at age seventy four earlier this year. Prior to his death, the singer partnered with composer Jim Steinman to produce one of the best selling record albums of all time, Bat Out of Hell. A few short years following the albums 1977 debut, Meatloaf filed bankruptcy. Many years later Meatloaf had newfound financial success. His net worth was estimated to be $40 million when he died on January 20, 2022.
There is no questioning the legacy of one of rock and roll’s biggest icons. But there are many unanswered questions about the design and distribution of Meat Loaf’s estate. Many stars, including Jimi Hendrix, Aretha Franklin, Prince, and Michael Jackson died without wills, igniting emotional legal battles among surviving family members. Although there is no indication Meat Loaf died intestate (i.e., without a will), we will postulate the strategy and details of his estate plan based on publicly known habits, legacy, and legal instruments.
The Rise, Fall, and Rise Again of Meat Loaf
Meat Loaf’s 1999 autobiography To Hell and Back.[1] described as a “rages-to-riches-to-rags-to riches” tale, reflects a life with few dull moments.
Meat Loaf’s dramatic lifestyle may have had its roots in his early Broadway appearances in Hair and The Rocky Horror Picture Show, and in the Rocky Horror film.
Later, in 1977 his first album, Bat Out of Hell, became the third best-selling album of all time. Yet the impact of Meat Loaf’s success sent\d him into a downward spiral of drugs, erratic behavior, and broken relationships. In 1983, he faced dozens of lawsuits from his musical partner, Jim Steinman, over song trademark rights. The result was that Meat Loaf filed for personal bankruptcy.[2]
Meat Loaf slowly ascended once again to the top of the entertainment pinnacle. He reconciled with Steinman, and the two collaborated on the successful comeback album, Bat Out of Hell II. By the time he died, Meat Loaf had appeared in hundreds of TV shows. He endeared himself to a younger generation of fans via his movie roles in Wayne’s World and Fight Club. During that time, he also married twice, and had two children.
Meat Loaf and Estate Planning Issues
Although Meat Loaf’s $40 million net worth[3] is relatively small compared to the world’s richest celebrities, he still left a considerable inheritance to his heirs. We must presume his fortune will go to his second wife, Deborah, and his two daughters from his first marriage, Pearl and Amanda.
Meat Loaf adopted Pearl when she was a young child. Pearl’s half-sister, Amanda, is six years younger than Pearl. Meat Loaf had a reputation for donating to charities, so he may also have included charitable giving in his estate plan, assuming he had one.
If Meat Loaf did have a plan in place, it probably addresses the following issues.
Estate Tax and the Lifetime Exemption
While most people don’t have to worry about Federal estate tax, it can come into play for high-net-worth individuals like Meat Loaf if they fail to take necessary estate planning measures to avoid it.
Generally, an individual who dies in 2022 is not subject to the estate tax if their estate is worth less than $12.06 million. The amount of the lifetime gift tax exemption is tied directly to the estate tax. A taxpayer can reduce the value of his or her estate thus avoiding or reducing estate tax, but certain gifting strategies can reduce the taxpayer’s estate tax exemption. A married couple can combine their exemption amounts; the first spouse’s remaining estate tax exemption can be “ported over” or transferred to the surviving spouse.
A $40 million estate, like Meat Loaf’s, will owe estate tax unless measures are taken to avoid or defer the tax. The unlimited marital deduction allowed Meatloaf leave his entire estate to his wife. without incurring gift or estate tax.
A bypass trust is another way to avoid the estate tax. Meat Loaf could have created a trust to hold his unused individual lifetime exclusion amount ($12.06 million), with any excess passing to his wife outright or through a marital trust, thereby bypassing estate tax liability upon Meatloaf’s death. Assuming Meat Loaf’s wife would be a beneficiary of the bypass trust, Meatloaf could have left his entire estate tax free to her. A bypass trust is more restrictive than outright distribution, but it offers some creditor and asset protection benefits not offered by outright distribution.
Adopted Children and Children with Different Needs
By law, adopted children are treated the same as biological children. Most adoptive parents support this law. There is no indication that Meat Loaf departed from it.
Some parents, though, treat their children differently in their estate plan, not because they do not care for them equally but because the children have different needs.
For example, Meat Loaf’s daughter Pearl is married to a member of the band Anthrax. Pearl herself is a musician. Not only does she have her own band, but Pearl also toured with her father for several years. Pearl is likely financially stable, so she is not dependent on inheritance from her father.
Pearl’s sister, Amanda, who has appeared in some popular TV shows and movies, is also probably not financially strapped. But hypothetically, if one sister was financially successful and the other was not, Meat Loaf might have made a provision in his estate plan that directed a larger share of his assets to the child with greater financial needs.
Blended Families
Blended families can prove challenging in both life and death. Someone with children from a previous marriage might have to balance providing for their children against providing for their spouse. Specifically, there might be concerns that if all the money were left to the current spouse, who is not the parent of children from a previous marriage, the spouse might not feel obligated to take care of those children.
For someone like Meat Loaf who may have been in this situation a qualified terminable interest property (QTIP) trust might be a solution. A QTIP trust can be structured in such a way that Meat Loaf’s wife would receive income from the trust property throughout her life, but when she passed away, the remainder of the trust assets would go to Amanda and Pearl, and his wife would be prevented from excluding them. In other words, if Meat Loaf had set up a QTIP trust, the funds would be distributed according to his wishes; his wife could not control the disposition of the remaining funds at her death.
Instead of setting up a single or “pot” trust for multiple beneficiaries, Meat Loaf could have chosen instead to establish multiple trusts that took immediate effect at the time of his death. Such separate sub trusts, or testamentary trusts, can be created for separate family members to simultaneously meet their individual needs.
There is some evidence that Meat Loaf used trusts, so he may have created living trusts that distributed assets during his lifetime. Variety reports that Meat Loaf and his wife held at least two homes in the same trust.[4] It could be that when Meat Loaf died, the property in this joint trust became his wife’s exclusive property.
Meat Loaf’s Plans Could Remain Private
The end result of Meat Loaf’s estate may be revealed in time. If the estate is probated the probate records will become public. But if Meat Loaf properly used and funded Trust and other estate plan strategies to his advantage, the details of his plan are unlikely to ever become public knowledge.
If Meatloaf did not have an estate plan, state intestacy law would apply. Meat Loaf owned homes in multiple states, including California, Tennessee, and Texas, but he died a resident of Tennessee. Therefor a Tennessee probate court would oversee the primary probate proceeding and California and Texas would have jurisdiction over the real estate subject to ancillary proceedings in those states. Since the laws of the state where real estate is physically located typically govern what happens to that property when the owner dies, California or Texas law rather Tennessee law could determine the disposition of Meatloaf’s homes in those states.
Intestacy laws are designed to accomplish what the decedent would want, but the intestate decedent loses all control over distribution of their legacy. To prevent such an outcome, even a basic will can outline the desired distribution of assets. Individuals with significant net worth can choose from many estate planning options and strategies to control their legacy, avoid estate tax, and provide for loved ones after their death,
For help and guidance designing your estate plan, please reach out to the lawyers at Cox Law Group (410) 988-3973, www.TheCoxLawGroup.com.
[1] David Dalton & Meat Loaf, To Hell and Back: An Autobiography (2011).
[2] Richard Milner, The Crazy Way Meat Loaf Was Stripped of His Money, Grunge (Jan. 21, 2022, 10:14 AM EDT), https://www.grunge.com/250486/the-crazy-way-meat-loaf-was-stripped-of-his-money/.
[3] What Was Meat Loaf’s Net Worth? Celebrity Net Worth, https://www.celebritynetworth.com/richest-celebrities/singers/meat-loaf-net-worth/ (last visited Apr. 27, 2022).
[4] Mark David, Meat Loaf Moves to Texas, Dirt (May 29, 2012, 6:29 PM PT), https://www.dirt.com/more-dirt/real-estate-listings/meat-loaf-moves-to-texas-1203471733/.
