The Life and Legacy of Jimmy Buffett

Jimmy Buffett died on September 1, 2023, at age 76 after a diagnosis of Merkel cell carcinoma (skin cancer) four years earlier. He was a renowned singer-songwriter, film producer, businessman, novelist, and philanthropist.

Buffett released his first album, Down to Earth, in 1970. By 2023, his net worth was officially $1 billion,[1] including a $180 million stake in his company, Margaritaville Holdings LLC, which opened in 1985 and now brings in $1 to $2 billion annually.

Who Stands to Inherit Buffett's Estate?

Buffett had an early three-year marriage to Margie Washichek, which ended in 1972, and married Jane Slagsvol in 1977. He and Jane had three children: Savannah, Sarah, and Cameron. The children have all pursued careers in the music, film, and entertainment industries.

According to the New York Times, most of Buffett's money and property, including intellectual property and music rights, are held in a trust. [2] His wife, Jane, is the personal representative distributing the estate according to his will, with help from his business partner and Margaritaville Holdings LLC CEO, John L. Cohlan, if necessary. Because the trust provides the family with privacy, there are no specifics regarding which belongings will be passed to his wife, three children, two grandchildren, and two siblings. His estate is estimated to include the following[3]:

1.    Music royalties of $20 million annually

2.    A collection of houses and cars

3.    150 Margaritaville restaurants, casinos, cruises, and related business holdings

4.    A yacht and several planes

5.    Stock market investments, including shares in Berkshire Hathaway

6.    Watches and memorabilia

Buffett was receiving close to $200 million annually for his shares in Margaritaville Holdings LLC, and issues with his health and medical expenses did not affect his business or family legacy. He was still growing his wealth when he died.

Other Estate Planning Strategies Buffett Could Have Included Beyond His Will

Buffett cofounded the Save the Manatee Club in 1981 with former Florida governor Bob Graham, supporting rescue, rehabilitation, research, and education efforts in the Caribbean, South America, and West Africa. During his lifetime, Buffett gave away and helped raise millions of dollars for charities. For every concert ticket he sold, one dollar went to a charitable cause he believed in. [4]

Charitable Remainder Trusts

Given his charitable actions during his lifetime, Jimmy Buffett may have established a charitable remainder trust (CRT) to incorporate charitable giving into his estate plan. This type of trust could secure his family's future by providing a consistent income source to his beneficiaries while ultimately honoring his charitable nature by leaving the remainder to the charity of his choice.

Family Limited Partnerships or Family Limited Liability Company

Buffett likely considered his restaurants to be much more than commercial enterprises, and business continuity may have been preserved by creating a family limited partnership (FLP) or family limited liability company (LLC). Using one of these entities could have enabled him to pursue different strategies to retain control of his business shares while gradually transferring ownership to his wife and children. He could also have taken advantage of the annual gift tax exclusion by making tax-free gifts of the limited partnership interests, thereby mitigating potential future estate tax implications.

Grantor Retained Annuity Trusts

A grantor retained annuity trust (GRAT) may have been another trust structure that Buffett considered to pass down his business interests while retaining certain financial benefits during his lifetime. A GRAT is an irrevocable trust that would have allowed him to transfer his business interests or other assets with the potential for significant appreciation in value to the trust while still retaining an income stream for himself via annuity payments for a specified term. At the expiration of the term, his beneficiaries would receive any trust assets, with any excess appreciation above the § 7520 rate transferred free of estate and gift taxes.

Family Trusts

After years of using and enjoying the property he owned, Buffett could also have taken steps to ensure the smooth transfer of assets, such as his airplanes, to future generations for their own use and enjoyment by establishing a family trust. A family trust would have allowed him to designate how the planes should be used, maintained, and cared for after his death.

In a well-designed estate plan, the things someone owns, such as Buffett's planes, money, and other significant property, would be transferred outside probate, thereby maintaining the family's privacy. Additionally, the beneficiaries would not have to wait to wrap up lengthy or costly court proceedings before inheriting the assets Buffett intended for them.

Long-Term Care Planning and Advance Directives

Buffett had plenty of funds to pay for his long-term care needs privately. Still, he may have set aside specific financial resources to pay for care in advance if he had consulted a professional advisor or estate planning attorney earlier in his life. Based on comments made by his family in his final days, he may have also prepared advance directives so everyone understood his wishes for care and treatment at the end of his life. Consequently, he has made a peaceful exit from a terminal illness on his own terms.

While Buffett's life may be over, he leaves behind a substantial legacy. Keep an eye out for the posthumous release[5] on November 3, 2023, of the album Equal Strain on All Parts, featuring guest contributions from Paul McCartney, Emmylou Harris, Angelique Kidjo, and the Preservation Hall Jazz Band.

If a loved one has recently passed and you are unsure what to do, please get in touch with us so we can help you restore stability and clarity to your life.  Click here to schedule a meeting.

Footnotes

[1] Jessica Tucker, Here's How Much Jimmy Buffett's Estate Is Worth (and Who Stands to Inherit It), The Things (September 8, 2023), https://www.thethings.com/how-much-was-jimmy-buffett-worth/#.

[2] Julia Jacobs, Jimmy Buffett's Will Appoints His Wife as Executor of His Estate,N.Y. Times (October 13, 2023), https://www.nytimes.com/2023/10/13/arts/music/jimmy-buffett-will.html.

[3] Gabbi Shaw & Jordan Parker Erb, Jimmy Buffett Became a Millionaire after 5 Decades in the Music Industry. Here's How the Late Singer Made and Spent His Fortune, Insider (September 2, 2023), https://www.insider.com/jimmy-buffett-billionaire-makes-and-spends-his-money-2023-4.

[4] Id.

[5] Megan LaPierre, Jimmy Buffett's Estate Announces Posthumous Album Equal Strain on All Parts, Shares Three Songs, Exclaim (September 8, 2023), https://exclaim.ca/music/article/jimmy_buffetts_estate_announces_posthumous_album_equal_strain_on_all_parts_shares_three_songs.

Doesn’t Everything Go To My Spouse And Kids When I Die?

Many people think that if they die while they are married, everything they own automatically goes to their spouse or children. They’re actually thinking of state rules that apply if someone dies without leaving a will. In legal jargon, this is referred to as “intestate.” In that case, the specifics will vary depending on each state's law, so where you live when you die can significantly change the outcome for your family. However, the general rule is that your spouse will receive a share, and the rest will be divided among your children. Exactly how much a spouse will inherit depends on the state, though.

Now, it may seem like, “So far, so good.” Your spouse is getting an inheritance, so are the kids. But here are some examples of how the laws can fail many common family situations.

First off, if both parents of minor-aged children die intestate, then the children are left without a legal guardian. Kids don't automatically go to a godparent, even if that's what everyone knew the parents had intended. Instead, a court will appoint someone to be the children's guardian. In such situations, the judge seeks to act in the children’s best interests and gathers information on the parents, the children, and the family circumstances. But the decision is up to the court, and the judge may not make the decision that you, as a parent, would have made.

When it comes to asset division, in most cases, state intestacy law presumes that a family consists of a husband, wife, and their natural-born children. But, that’s not necessarily the way many families are structured, and things can become legally complicated quickly.

According to Wealth Management, one analysis has 50 different types of family structures in American households. Almost 18% of Americans have been remarried, and–through adoption and stepfamilies–millions of children are living in blended families. The laws just haven't kept up, and absurd results can occur if you rely on intestacy as your estate plan. Stepchildren that you helped raise (but didn’t legally adopt) may end up with no inheritance, while a soon-to-be-ex-spouse may inherit from you.

Say, for instance, a father has a will that allocates assets to his spouse and two children, then they adopt a third child. Then, the father dies in a car accident before he's able to revise his will. In some states, because the adopted child is not mentioned in the will, she may not be entitled to any inheritance.

If that isn't worrisome enough, consider that, in some states, the law provides that an adopted child still has rights to the biological parents' assets–and the biological parents are entitled to inherit a child's wealth. (Imagine if the adopted-as-an-infant Steve Jobs had died intestate, and his biological parents demanded a share of his estate!)

Of course, with a will or trust, you can control your estate and essentially eliminate the risk of these crazy results.

What if You and Your Spouse Are Separated?

State law decides what happens to your estate if you are separated from your spouse when you die. Much of the time, the court ignores your separation and just considers you still legally married.

Unless you have a prenuptial or postnuptial agreement, it is extremely difficult to disinherit your spouse. Again, even if a spouse is omitted from a will, state laws might choose to give a surviving husband or wife a share of the assets.

If you are separated from your spouse, and your divorce is pending, you should definitely talk with your divorce lawyer and an estate planning attorney about your options.

Creditors Win:

Intestacy provides no asset protection or preservation benefits. Without any protections in place, an estate's assets are still vulnerable to creditors, lawsuits, and others who may claim entitlement to the property. These claims would take precedence over the statutory requirements for inheritance. In other words, the family may not receive the lion's share of the estate. They'd get the leftovers.

The best way to safeguard and pass along what you’ve worked so hard to build is to talk to a qualified estate planning attorney. If you want to ensure that your family is cared for, please click here to schedule your complimentary Estate Planning Strategy Call with San Francisco’s premier estate planning attorney, Matthew J. Tuller.