Estate planning for complex financial situations

by | Feb 17, 2016 | Estate Planning |

Estate planning can often be complicated, and this often increases when looking into creative ways to set up an estate so that it benefits other family members in the future. However, these creative approaches can sometimes increase the value of the estate and set those family members up with more assets and a smaller tax burden.

A good example is the estate of musician David Bowie, who recently passed away. Bowie wanted to create a system so that he and his family could be financially well-off both during his life and after his death, and he started working on it at a young age. To do so, in 1997, he created a number of “Bowie Bonds.”

Using the bonds, Bowie sold a 10-year investment, set up like an annuity. The return on this investment was set at 7.9 percent, a fixed rate over the ten-year period. He was then able to sell to Prudential Insurance Co. of America for $55 million.

According to his legal team, he wasn’t so much interested in helping himself, but in providing for his daughter, his son, and his current wife. By using the Bowie Bonds system, his estate benefited from all of the music he had created over the years, and there were additional tax savings that preserved his assets. Now that he has passed away, his estate can be given to his family members, and it’s valued at more than $200 million. It could also earn more as there is a surge in purchases, and it could keep earning indefinitely.

Though Bowie had made financial mistakes early in his career, the Bowie Bonds system prevented that from happening again.

Even though many people in New York may not have the assets that Bowie had, his example shows how it can be wise to look into complex, creative ways to work on estate planning, even from an early age, to pass on as much as possible to one’s family.

Source: Forbes, “A Peek Into The David Bowie Estate: His Legacy Extends Beyond Music,” Danielle and Andy Mayoras, accessed Feb. 17, 2016