BRMM’s attorneys Andy and Danielle Mayoras recently authored an article discussing David Bowie’s use of an estate planning instrument dubbed a “Bowie Bond,” a creative move that helped him ensure that his family would benefit from his music catalog.
David Bowie’s recent passing has the music world and fans in mourning. He passed away from liver cancer two days after his final album, Blackstar, was released on his 69th birthday. His music forever changed not only the landscape of modern rock, but the musical stylings of many other genres.
Bowie’s Innovation Not Limited to Just Making Music
While his innovative music is world-renowned, few people know about the creative, gutsy move he made in estate planning. With the help of investment banker David Pullman, he issued Bowie Bonds, selling a stake in the catalog of his music. This move defies the more common arrangement of selling outright the rights to his songwriting, performance, and licensing for the countless hit songs and albums of music he produced. The Bowie Bonds constituted a 10-year investment, for $55 million, that functioned much like an annuity. It provided a fixed rate of return of 7.9%. The payouts were secured by all his royalties and copyrights in his music. Even though the structure of the music industry changed dramatically after Napster came on the scene, reducing the worth of royalties and throwing the value of album production as we had known it into flux, Bowie Bonds still did well. In fact, Prudential Insurance purchased all of the bonds and were paid back in the 10-year timeframe as expected.
Pullman was recently interviewed about the Bonds. He said that Bowie made the financial arrangement for his family — wife Iman, and children, 15-year-old daughter Alexandria and film producer son Duncan Jones from his first marriage.
Although he has been interested in passing his assets onto his family from a young age, he was not always so fiscally conscientious. In the 70s and 80s, David Bowie went through financial turmoil, almost needing to file bankruptcy. It was after meeting his wife Iman and moving to New York that he decided to turn the tide and make smart financial moves for his estate.
Bowie Bonds and Beyond
Bowie utilized the Bowie Bond plan to take advantage of tax savings and arrange benefits flowing to his estate from his music catalog. His estate is estimated to be worth $200 million, with the lion’s share going to his wife Iman, with his two children still receiving significant bequests.
The full scope of Bowie’s estate planning documents have not been released, and a spike in sales may even change his estate’s net worth. So far, it appears that Bowie relied primarily on a will — instead of allowing his assets to pass free of probate court through a properly-funded trust. His 2004 will was recently filed with probate, indicating that David Bowie left his SoHo apartment and 50% of the residue of his estate to his wife, Iman, with the other 50% split between his two children from prior marriages — but with his daughter receiving real estate in upstate New York. Bowie also made generous bequests to his long-time personal assistant and a former nanny.
For all of Bowie’s foresight in planning, it is certainly odd he did not attempt to avoid probate court through a revocable living trust. Wills must pass through probate court to work, but trusts can skip the process entirely when properly drafted and prepared.
BRMM: Your Choice for Careful, Creative Estate Planning
BRMM attorneys take pride in putting together estate plans that are tailored to each client’s unique situation. Not only are we there to draft the plan, but we are there for you year after year, as your trusted advisors to update your plan and make sure your estate will be properly handled according to your wishes after you pass. Contact our Troy, Michigan law office today at (248) 641-7070 for a free, confidential consultation. Get started today on taking action for tomorrow.