A songwriter or performer’s catalog can outlast the career, but only if someone can say who owns it and how. A New Orleans tax attorney explains entity classification, estate valuation and the questions a musician should settle before a sale, a partnership or a family handoff.
By Dr. Tamara Patzer
A song can earn money long after it is written. That is the appeal of a catalog, and it is also the trouble, because income that lasts for decades passes through many hands: co-writers, publishers, labels, managers, a spouse, children. Each of them has a claim on some part of the story, and the paperwork seldom keeps up. Todd M. Villarrubia, a New Orleans attorney who focuses on tax and estate planning, wrote Entrepreneurial B.E.A.S.T. Mode™ about the structures that hold valuable things together. His advice for owners of any asset applies to musicians with little adjustment: know who holds it, and know how.
Is a working musician a small business?
In the sense that matters for planning, yes. The U.S. Small Business Administration counts 36,207,130 small businesses in the United States, with 62.3 million employees4. A musician with a band, a booking agent, a studio and a merchandise line is running an enterprise whether or not it has a name. The enterprise has owners, contracts, income and risk, and all four need to be written down.
Question one: who holds the rights and the income?
The answer is often a patchwork. Some rights belong to the writer, some to a publisher, some to a company the musician formed, some to a collaborator. Income may flow through a manager’s account or a collection society before it reaches the musician. When the musician dies, becomes ill or wants to sell, someone has to trace each piece.
The book’s most repeated rule is a short one: “Wealth preservation depends not on what you own, but on how you own it.” A musician who keeps a single list of rights, who holds each, and where the contracts are kept is far ahead of one who relies on memory.
Question two: what entity holds the business side?
A band, a studio or a touring operation usually deserves a proper company, so that contracts, equipment and money sit in an entity and not in someone’s personal name. The IRS explains that an eligible entity can file Form 8832 to elect whether it is classified as a corporation, a partnership or an entity disregarded as separate from its owner1. The legal form and the tax treatment are separate choices.
Villarrubia puts it plainly: “Every entity can be taxed differently depending on elections made with the IRS.” A musician who formed a company years ago, perhaps in a hurry, should ask whether the classification still fits. A band with several members faces an additional question, since a partnership among them may exist whether or not anyone signed anything. A written agreement settles who owns what before a quarrel does.
Question three: what happens if a member leaves?
Bands change. A drummer departs, a co-writer falls out, a founder wants to go solo. If the company’s papers say nothing, the answer is decided by whoever has the better lawyer or the louder voice. The agreement among owners should say how a departing member is bought out, who keeps the name and what happens to songs written together.
None of this is romantic, and all of it is cheaper to settle in a calm year than in a bad one. The book describes a pattern among families that keep their wealth: they settle the hard questions early and share the reasons behind them. A band is a kind of family, and it benefits from the same discipline.
Question four: what is the catalog worth to an estate?
The tax rules look at value on the day of death and not at what a family could spend. The IRS lists $15,000,000 per person as the federal basic exclusion amount for people who die in 20262. Most musicians and their families will be well below it. For those whose catalogs are valuable, the question is real, and the book frames it in one sentence: “Estate taxes are calculated on fair market value, not cash flow.”
A catalog that is worth a great deal on paper but pays modest royalties can leave heirs with a high valuation and little cash. Someone has to decide how the family would pay any tax, whether by selling a share, borrowing or using insurance. A licensed attorney and a valuation professional can model it. A musician who is far from the exclusion still benefits from the exercise, since it clarifies who gets what.
Question five: what do you want to happen?
Not what the law will do, but what you hope for. Should the family keep the catalog or sell it? Should one child manage it, or should a professional? Should part of the income support a cause, a school or a scholarship? Without an answer, the decision falls to others.
Villarrubia is direct about the cost of leaving it open. He writes, “Succession planning ensures that wealth endures and, more importantly, doesn’t fracture your family after you’re gone.” A letter of wishes, written in plain words and kept with the estate documents, is often the most useful page a musician can leave.
How big is the transfer that is coming?
Large. Cerulli Associates expects $124 trillion to pass between generations in the United States through 2048, including $105 trillion to heirs and $18 trillion to charity3. Some of that will be creative property. The musicians who plan now are the ones whose heirs will understand what they have.
What should a musician do this month?
Start small. Make a list of every song, recording and right, with the contracts that govern them. Name the people and companies that receive income. Find the formation papers of any company you own. Ask your attorney how it is classified for tax and whether an agreement among owners exists. Then ask your lawyer and your accountant to talk to each other.
Common questions
Should I sell my catalog? That depends on your goals, the offer and the tax consequences, and no article can answer it. Ask an attorney and a tax professional before you sign anything.
Do I need a will if I have a company? Yes. The company does not replace estate documents, and a licensed attorney can explain how the two fit together.
What if my co-writer and I never signed anything? Then you have found a task. A written agreement now is far easier than a dispute later.
Sources
- Internal Revenue Service, About Form 8832, Entity Classification Election
- Internal Revenue Service, What’s New: Estate and Gift Tax
- NAPA-Net, Wealth Transfers Expected to Hit $124 Trillion Through 2048 (reporting Cerulli)
- U.S. Small Business Administration, Office of Advocacy, Frequently Asked Questions About Small Businesses 2026
About the author. Dr. Tamara Patzer is a publisher and former newspaper editor. She was on the staff of The Charlotte Sun when it was named a 2005 Pulitzer Prize finalist for its Hurricane Charley coverage.
About the source. Todd M. Villarrubia is an attorney with an LL.M. in Taxation and a Juris Doctorate. He is an Accredited Estate Planner, a Board Certified Expert in Estate Planning and Administration, and a Fiduciary Investment Advisor Representative. He is the author of Entrepreneurial B.E.A.S.T. Mode™. Wealth Planning Law Group, 101 W. Robert E. Lee Blvd., Ste 404, New Orleans, LA 70124. Phone: 504-982-8207; email: todd@lawealthplan.com; website: https://lawealthplan.com/?utm_source=newsanchored&utm_medium=music-observer&utm_campaign=top-1pct
Attorney advertising. Sponsored feature written on behalf of Todd M. Villarrubia. This article is general information, not legal or tax advice, and reading it does not create an attorney-client relationship. Results vary.
