THE POSSIBLE FATE OF MEAT LOAF'S $40 MILLION ESTATE
Meat Loaf, born Marvin Lee Aday, passed away in January of 2022 at the age of 74. The singer behind 1977’s Bat Out of Hell—one of the best-selling albums of all time—experienced ups and downs throughout his life. He hit rock bottom with his 1983 bankruptcy but rode a 1990s career rebirth to newfound financial success. The musician, actor, and producer’s net worth was estimated to be $40 million at the time of his passing.
There is no questioning that this rock and roll icon left a hole in the music industry at his death. And there are still unanswered legal questions about the fate of Meat Loaf’s estate. Many stars, including Jimi Hendrix, Aretha Franklin, Prince, and Michael Jackson all died without wills, sparking long legal battles among surviving family members. Here is what we know, and what we don't know, about Meat Loaf's estate plan and legacy.
THE RISE AND FALL OF MEAT LOAF
Meat Loaf titled his 1999 autobiography To Hell and Back. Described as a “rags-to-riches-to-rags-to riches” tale, it encapsulates a life that seemed to have few dull moments.
Many would describe Meat Loaf’s style as theatrical, which makes sense as he started his entertainment career in stage acting. Meat Loaf appeared on Broadway in Hair and The Rocky Horror Picture Show, and in the Rocky Horror film, before releasing his first album, Bat Out of Hell, in 1977.
The album became the third-best-selling album in history, but its success sent Meat Loaf into a downward spiral of drugs, erratic behavior, and broken relationships. In 1983, facing dozens of lawsuits from his musical partner, Jim Steinman, Meat Loaf filed for bankruptcy.
From there, Meat Loaf slowly ascended once again to the top of the charts. He reconciled with Steinman, and the two collaborated on the successful comeback album, Bat Out of Hell II. By the time of his death, Meat Loaf had appeared in hundreds of TV shows, gained prominence in the younger generation's culture due to his roles in Waynes World and Fight Club, married twice, and had two children.
MEAT LOAF'S ESTATE PLANNING ISSUES
Although Meat Loaf’s $40 million net worth is relatively small compared to other celebrities, it is still a considerable inheritance to leave behind. Presumably, his fortune will go to his second wife, Deborah, and his two daughters from his first marriage, Pearl and Amanda.
Because Meat Loaf was known for giving money to charities, he may also have included charitable giving in his estate plan—assuming he had one.
Due to the size of Meat Loaf's estate, experienced estate planning attorneys everywhere hope that his documents addressed the following issues.
Estate Tax and the Lifetime Exemption
While most people do not have to worry about the federal estate tax, it can come into play for high-net-worth individuals like Meat Loaf. However, excessive estate tax can be avoided through proper estate planning.
In general, the estate of someone who dies in 2022 is not subject to the estate tax if their estate is worth less than $12.06 million. This number takes into account all of their assets: cars, real estate, bank accounts, retirement accounts, investments, etc.
There are a few ways to lessen the value of your estate and thus avoid the estate tax. One is by gifting. The amount of the lifetime gift tax exemption is tied directly to the estate tax. Based on the gift tax exemption, an individual can give away some of their wealth to their intended beneficiaries during their lifetime without being taxed.
An estate worth $40 million, such as Meat Loaf’s, will owe estate tax. But, there are more ways to avoid or defer paying the tax. One way would be to use the unlimited marital deduction and leave everything to his wife. This option allows someone to transfer all of their assets to their US-citizen spouse at any time—including at the time of their death—without incurring gift or estate tax.
Using a bypass trust is another way to avoid the estate tax. In this case, Meat Loaf could have created a trust to hold an amount equal to his unused individual lifetime exclusion amount ($12.06 million), with any excess passing to his wife either outright or through a marital trust, therefore bypassing estate tax liability. Meat Loaf’s wife would probably be a beneficiary of the bypass trust, so this approach is just a variation of leaving everything to her. Though this structure is more restrictive than a 100% outright distribution, it can offer some creditor and asset protection benefits.
ADOPTED CHILDREN AND CHILDREN WITH DIFFERENT NEEDS
Under estate law, adopted children are treated the same as natural-born children. Most parents of adopted children agree with this stance, and there is no indication that Meat Loaf would have wanted to depart 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. Such differences can be reflected in the estate plan.
For example, Meat Loaf’s daughter Pearl is a musician herself and married to another successful musician. It can be assumed that, between herself and her husband, Pearl is already financially well-off and not dependent on her father’s inheritance.
Her sister, Amanda, an actress, is probably not hurting for money either. But 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. It can be difficult to balance wanting to provide for your children from a previous marriage and wanting to provide for your current spouse.
For someone like Meat Loaf who may have been in this situation (there is no evidence that he was; this is just to provide an example), 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 throughout her life, but when she passed away, the remainder of the trust assets would go to Amanda and Pearl.
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 testamentary trusts, can be created for separate family members to simultaneously meet their individual needs.
There is some evidence that Meat Loaf used trusts. Variety reports that Meat Loaf and his wife held at least two homes in the same trust. It could be that when Meat Loaf died, the property in this joint trust became his wife’s exclusive property.
MEAT LOAF’S PLANS WILL LIKELY REMAIN PRIVATE
The fate of Meat Loaf’s estate may be revealed in time if the estate has to go through probate. However, Meat Loaf likely put all his assets into trusts, and the estate won't have to go through the public process of probate. We may never know what became of his $40 million fortune.
In the unlikely event that Meat Loaf didn't have an estate plan, intestacy law would apply. Meat Loaf owned homes in multiple states, including California, Tennessee, and Texas, but it appears that he died as a resident of Tennessee. This means that a Tennessee probate court would oversee the domiciliary proceedings while California and Texas would have jurisdiction over the real estate there. State law will determine what happens to real property.
Though intestacy laws are intended to accomplish what a state assumes the decedent would want, dying intestate is often a worst-case scenario. The decedent effectively loses control over the details of their legacy. And it's not just celebrities who require an estate plan. Everybody should have a basic will at the very least, no matter their wealth. Individuals of any net worth can take control of their legacy, avoid estate taxes, and provide for loved ones through savvy estate planning.
For help and guidance in designing your estate plan, please reach out to our office at 614-389-9711 and schedule a consultation.
To learn more about estate planning, read our Consumer's Guide to Estate Planning in Ohio here.