BRMM Law’s Andy Mayoras recently appeared on Extra TV to discuss the Estate of Lisa Marie Presley. While Presley had left behind Graceland to her three daughters, the celebrity also had a complex financial legacy. Although she supposedly inherited a $100 million fortune from her father, Elvis, reports say she had gone through that amount of money and owed the Internal Revenue Service $1 million at the time of her death. “She was living like Elvis’s daughter, even though her income stream didn’t necessarily support that lifestyle,” Andy explained on the show.
The History of Presley’s Complicated Financial Situation
Andy and his wife, Danielle Mayoras, who is also a partner at BRMM Law, co-authored an article for Forbes in 2019 — Lisa Marie Presley & The Rise and Fall of the Elvis Estate — that illustrated the complexities of the Presley estate. The article explains the complicated financial situation that Lisa Marie had inherited.
Although Elvis’s earnings were estimated to be anywhere from $100 million to one billion dollars, he left a cash-poor estate behind when he passed away in 1977. The IRS later determined that the actual value of Elvis’s estate was more than what appeared on the estate’s tax return and imposed an estate tax of $10 million, resulting in the estate being in financial peril. To complicate matters further, the estate could not rely on the royalties from Elvis’s recordings because his manager had brokered a deal to sell them for much less than they were worth.
The late Elvis’s wife, Priscilla, assumed primary management of the Presley estate as an executor. She formed Elvis Presley Enterprises in order to manage the royalties that remained and turn Graceland into a popular tourist destination. By 1993, the year Lisa Marie became eligible to inherit the money from Elvis’s will, the estate had grown in value to $100 million. But rather than receive her inheritance directly, Lisa Marie created a revocable living trust and appointed others to act as trustees — including her business manager, who she claimed mishandled the assets in the trust.
When nearly all of the money from the trust was gone, Lisa Marie was left with a considerable amount of debt. She brought a lawsuit against the business manager and his financial company, Provident Financial Management alleging that he concealed the trust’s true financial condition while distributing a substantial amount of assets from the trust in order for her to fund her excessive spending habits. By 2015, only $14,000 remained in the trust and Lisa Marie owed hundreds of thousands of dollars in debt, including unpaid taxes.
Upon her tragic passing at the age of 54, Lisa Marie was the sole owner of Graceland, which is believed to be worth tens of millions of dollars and would be enough to cover any outstanding debts she owed.
What Happens if You Pass Away with Debt?
The highly publicized story of the debt incurred and owed by Presley’s estate sheds light on the question many people may have when it comes to estate planning: what happens if you pass away with debt? Importantly, when someone passes away owing a debt, it doesn’t go away.
The decedent’s estate is usually responsible for paying off any unpaid debts. If there is no money or property in the estate with which to pay the debt, it generally goes unsatisfied. It’s essential to understand that under Michigan law, the decedent’s spouse, children, or heirs are not typically required to pay their loved one’s unsecured debts from their own assets — it is only paid with the money the decedent left behind. But if you are cosigned on a loan with the deceased, you may be held responsible for the debt.
If the debts exceed the value of the assets, an estate is considered insolvent. This can happen if the deceased has a significant amount of debt or there are very few assets in the estate. In such cases, creditors will only collect a portion of the debt that they’re owed and the rest will be forgiven. When this happens, the decedent’s heirs will typically not receive an inheritance. Nevertheless, certain assets are protected from creditors, including life insurance policies, trusts, and retirement accounts.
Notifying Creditors and Settling a Decedent’s Debts
Part of the Michigan probate process is notifying known and unknown creditors when a debtor has passed. This can be done by publishing a notice in a legal newspaper since it is usually not possible to know each and every creditor of the deceased. There are strict procedural requirements that must be met to ensure compliance with the notice requirement. However, it doesn’t matter whether a creditor actually saw the notice, as long as it was published.
Creditor claims must be paid before beneficiaries and heirs can receive their inheritance from the estate. In cases where there are insufficient assets to pay all the debts owed by the estate, Michigan law specifies the priority order in which they must be satisfied. When an estate lacks sufficient assets to make full payment on each debt, the personal representative of the estate must certify the deficiency to the trustee of any revocable trust the defendant had at the time of their passing. The deficiency may then be paid from the trust or collected from non-probate transfers of which the personal representative is aware.
Contact an Experienced Michigan Estate Planning Attorney
With proper estate planning, you can safeguard your loved ones from your debts when you pass away. The skillful estate and probate attorneys at Barron, Rosenberg, Mayoras & Mayoras can assist you with creating a comprehensive estate plan to help ensure your wishes are carried out. Schedule a consultation today by calling (248) 213-9514 in Michigan or (941) 222-2199 in Florida to learn how we can assist you. You can also use our simple online contact form.
BRMM Law’s Andy and Danielle Mayoras are co-authors of the best-selling book, Trial & Heirs: Famous Fortune Fights!, which highlights the importance of estate planning by using celebrity stories to spark conversations with family about these issues — and avoid the same mistakes. More information about the book can be found at DanielleAndAndy.com.