The late lead singer and guitarist of The Velvet Underground, who later had a decades-long successful solo career, was the man who famously sang “Hey babe, let’s take a walk on the wild side.” He seemed to take that lyric to heart when it came to his estate planning, and his estate is worth more than $30 million.
Lou Reed passed away from liver disease on Oct. 27, 2013 at the age of 71. Recent filings in probate court in Manhattan show that since his death less than a year ago his estate has already earned another $20.3 million. This income has come from his copyright, publishing, and performance royalties as well as other deals that were put together by his longtime manager, Robert Gotterer. Mr. Gotterer is also one of the co-executors of Lou Reed’s estate.
Details of Lou Reed’s Estate
Mr. Gotterer recently filed motions in probate court, reporting on the income earned in the estate. All in all, $10 million in assets are set aside for Reed’s wife and sister as well as another $500,000 set aside for his mother’s care. Reed’s wife and sister will split the residual of the estate 75% and 25%, respectively, with real estate totaling over $9 million going to his wife alone.
And despite the enormous wealth of his estate, Reed’s executors are only asking for $220,000 in fees. Compared to Michael Jackson’s executors, who are taking 10% of most business deals (including the $250 million deal with Sony), Reed’s executors are being paid practically nothing. But why do we know all of the details of his estate, and why is this plan taking a walk on the wild side?
Reed’s Estate Plan
The reason that Lou Reed’s estate is public knowledge is because Reed relied on a will that he signed in 2012. The will was thirty-four pages long, but it was still only a will. Because Lou Reed did not use a revocable living trust for his plans the estate must go through full probate in the court system, and that means that everything within his estate is made public. The New York Post is breaking news about every piece of his estate that becomes public knowledge, and media outlets across the world are commenting in their own stories about the details of Reed’s estate.
Unfortunately, if Reed had used a revocable living trust and transferred his assets into the trust during his lifetime all of this information would have been kept secret from the public. No one would have the details of his estate’s worth, know who gets what, or even know how much his executors were getting paid for their time. In other words, trusts keep your estate private, while wills must go through probate court – a fully public process.
While the common person may not need to worry about the press leaking the details of their estate, there are plenty of other reasons why you should strive to avoid probate court. Besides being public, probate court is also expensive, time consuming, stressful, and often causes family fights. These fights break out because it is much easier to file challenges or objections in probate court than to a private trust. Additionally, it is much simpler to leave instructions, conditions, limitations, or suggestions in a trust document. So while Lou may have taken a walk on the wild side with his estate planning, we can take away the importance of avoiding probate court and using private estate planning documents in our own estates.