Although you might think of an estate plan simply as a way to dispose of your existing assets, in fact your future estate might also be responsible for collecting additional income generated after your death. If you work in the entertainment industry, for example, your estate may still collect residual payments for years—even decades—after you're gone. According to a recent report by the entertainment website Deadline Hollywood, the Screen Actors Guild (SAG-AFTRA) currently holds more than $40 million in unpaid residuals that belong to living and deceased members. In these cases, the union simply cannot locate the person or his or her estate to make the payments.
What Is a “Residual”?
A residual is any payment made to a performer in a television show or movie for the rebroadcast of that work. For actors, residuals are governed by a series of labor agreements between the studios and SAG-AFTRA. Since the 1970s, residuals have been unrestricted, meaning the performer must receive a payment for each rebroadcast without limit. This means residual payments may continue well after the performer's death.
Although SAG-AFTRA is responsible for administering these payments, residuals are the personal property of the performer, who may leave them to anyone in a will or trust. If a performer fails to make an estate plan, residuals would then pass under the intestacy laws of the state governing the person's estate.
Under SAG-AFTRA rules, neither the union nor the studios are obliged to split residual payments among multiple beneficiaries. So if a performer chooses to name multiple beneficiaries, those persons must agree upon a single “nominee” to receive the residual payments after the performer's death. The nominee is then responsible for dividing the residuals as specified by the performer's will or trust. This nominee may be a bank or other corporate trustee.
As the Deadline report noted, SAG-AFTRA has been unable to locate the estates or beneficiaries of many well-known deceased performers, such as comedian Andy Kaufman, who died in 1984. A Deadline writer managed to locate Kauffman's daughter, who said she was unaware SAG-AFTRA had continued to collect her father's residuals. While SAG-AFTRA has an entire department dedicated to locating heirs and estates, it is apparently overwhelmed by the sheer number of “missing” recipients.
It is important to note that while performers may earn residuals in perpetuity, once a studio makes a payment, SAG-AFTRA only has to hold it for three years. If it remains unclaimed by a performer's estate, the union may simply keep the money. This mirrors California's unclaimed property law, which requires banks and other financial companies to turn over a customer's account to the state controller if there has been no contact for three years.
Locating and collecting unclaimed property is actually a common duty of estate executors and trustees. That is why it is essential you prepare a proper estate plan and designate a person or persons to ensure every asset in your name is properly accounted for. Contact the Law Office of Scott C. Soady in San Diego today if you have questions about this or any other estate planning matter.