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Estate Issues Litigated in J.R.R.Tolkien Estate 26 Years after Death

In the Estate Planning area, we frequently see estates remaining open for years or litigation developing long after a person’s death. Do you remember “The Hobbit” written by J.R.R. Tolkien? For many of us baby boomers, it was a favorite story, one of the first “fantasy” novels which have become so popular. First published in 1937, it is now scheduled to be released in theaters as two prequels to the “Lord of the Rings.” The “Lord of the Rings” trilogy grossed about $2.9 billion world wide plus another $3 billion from DVD, TV licensing, and merchandise.

The movie based on The Hobbit was a long time coming because the movie studio who owned the rights to the story was sued by the heirs of J.R.R. Tolkien who died in 1973. Mr. Tolkien had sold the movie rights in 1969 for $250,000. The studio was to pay his heirs a percentage of the gross receipts after certain production and advertising expenses were deducted. The two children of Mr. Tolkien claimed that the accountancy methods used to apply this formula were improper so as to reduce the payments to them. Their initial demand in the lawsuit was in excess of $150 million, which increased as the case progressed because discovery, according to the estate’s lawyers, revealed additional impropriety.

The case was scheduled to go to trial in October and has apparently been settled. The settlement amount is confidential although some sources claim it is well over $100 million. The settlement paves the way for the movie studio New Line Cinema, a subsidiary of Warner Brothers, to move forward with the Hobbit movies.

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