Settling Stan Lee’s estate may hinge in part on valuing the comic-book legend’s claim that his blood was stolen and sold.
The already considerable challenges involved in figuring how much tax the estate owes are compounded by a number of lawsuits the co-creator of Spider-Man and the Incredible Hulk was involved in near the end of his life. He died Nov. 12 at age 95.
Perhaps the most complicated is one against his former publicist, Jerardo “Jerry” Olivarez, accusing him of transferring millions of dollars from Lee’s bank accounts and even engaging in a scheme to sell Lee’s blood as a collectible. The estate may have to place a value on the lawsuit while separately trying to value unique assets like the right to Lee’s post-mortem likeness if it appears in future movies.
This all needs to happen in the nine months an estate has to file a tax return after a person’s death —15 if it gets a filing extension. The actual tax amount must be paid within nine months; seeking an extension doesn’t buy more time for paying. The 40 percent estate tax kicks in for estates worth more than $11.18 million for individuals and $22.36 million for married couples.
“If the lawsuit has not been resolved prior to the filing of the estate tax return there’s a big, difficult problem in how do you value that possible recovery that you might get some time in the future,” said Donald Perry, chairman of the trusts and estates department at Phillips Nizer LLP.
Lee’s estate faces a tough challenge in proving the charges against Olivarez, especially now that one of the “star witnesses” has died, according to estate tax attorneys.
Beverly Hills law firm Freund Legal, which was representing Lee in the case, confirmed Nov. 13 that the suit is still active and that the next step will be for the firm to file a motion to replace Lee with an estate representative as the plaintiff.
“People that will continue this action will have to prove a lot of things that are intimate and of a very personal nature,” said William I. Sanderson, a partner and co-chair of McGuireWoods LLP’s private wealth services group in Washington. “That’s going to be difficult.”
The estate has to prove that Lee was an unwilling participant in the transactions described in his complaint, and many of the interactions occurred behind closed doors, Sanderson said.
“I would imagine that the difficulties in proving what was done could affect valuation issues,” said Jeffrey E. Nusinov, managing attorney of Nusinov Smith LLP. Nusinov represented the estate of Tom Clancy, the best-selling author of “Clear and Present Danger” and other military thrillers, in an $11.8 million tax liability case against the IRS in 2016.
The value of the damages being claimed in the case are also entirely speculative because Lee and his lawyers were seeking an “amount to be proven at trial,” Sanderson said. The complaint does list dollar amounts allegedly transferred out of Lee’s accounts, which could act as the basis for an appraisal, but the total recovery amount could be very different based on what a court decides, he said.
The valuation also needs to take into account any costs the estate will incur—to pay for lawyers, forensic accountants, etc.—as a result of the legal proceedings and any deductible expenses, Perry said.
“It’s not a science,” Perry said of such appraisals. “It’s more like magic.”
Speaking of Valuation
In addition to the value of his pending litigation, Lee’s estate will likely have to deal with other hard-to-value assets such as his postmortem image and likeness rights—an issue that was at the center of an IRS dispute with Michael Jackson’s estate.
Lee made cameos in many Marvel Comics films. With new technology it’s possible he could continue to make such appearances after his death, Nusinov said.
There are also likely unique collectibles and memorabilia. For example, Lee may have owned original comic-book illustrations. Those types of assets are difficult to value in any situation, but the fact that they were owned by Lee may create even greater challenges, Nusinov said.
“I can’t recall any other superhero creator in our time who has had this much success,” he said. “So to really try and determine what a fair market value is and what impact his death will have on certain memorabilia I think would be very difficult to accomplish.”