Before being overshadowed by the election, the talk of the social media universe in the past week and a half was Disney's purchase of the George Lucas film business (LucasFilm). The film company owned all the rights to the mega-popular Star Wars francise, and the purchase might mean that another Star Wars film will be in the works in coming years. Perhaps the most eye-popping part of the deal was the sale price. Disney apparently paid a staggering $4.05 billion in cash and stock for LucasFilm.
Since the deal was announced many professionals in the fields of tax and estate plannining have chimed in, noting that the decision to sell now was likely a smart one by Lucas. It will probably pay many divideds in the future for himself and his family. At a general level, by cashing out now Lucas will spare his family the very difficult and complex challenge of handling these matters upon his passing. At 68 years old, hopefully that time is still several decades in the future; however, prudent planning is timely planning. In addition, selling the company allows Lucas to spend more of his times on philanthrophy--something that he has been committed to for decades. He explained recently that he plans to donate most of his wealth to educational efforts around the world.
Beyond that, the timing of the move was likely motivated by smart assessment of the current tax climate. As recently discussed in a Forbes article on the subject, the current capital gains tax rate and brackets are set to be far less favorable in the coming year. No matter who was elected this year, increases in the tax rates to some degree were likely. However, by acting now, Lucas may have saved significant sums on taxes as a result of the immense gain in value of his company since it was founded.
Estate Planning/Transition Lessons
Of course, the savvy move by Lucas is a reminder to all residents, particularly those with businesses of their own, to think prudently about these transitions details. This is true no matter how big the business. In fact, smaller business owners often require more complex transition details. That is because, unlike LucasFilm, most business owners cannot simply sell everything to a large conglomerate like Disney. Instead, more nuanced details have to be worked out to transition an enterprise to another while ensuring resources are available for retirement and an inheritance.
If you are in this situation, please act prudently and seek out help to ensure the best is done for you and your family long-term. In many situations a combination of estate planning lawyers, tax professionals, and others are needed to ensure that everything works to maximize your interests. Considering the likely tax and legal changes on the horizon at a federal level, it is also critical to act soon to best meet your goals.
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