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Legal and Tax Considerations When Representing Influencers and Content Creators

Jan 21, 2025 | Business Planning, Family Law, Podcasts, Technology Recommendations

“Legal and Tax Considerations When Representing Influencers and Content Creators,” that is the subject of today’s ACTEC Trust and Estate Talk.

Transcript/Show Notes

This is ACTEC Fellow Travis Hayes of Naples, Florida.

Influencers and content creators are individuals or entities who produce and share information across social media platforms to engage audiences, build a following, and often promote products, services, or ideas. Their business model primarily revolves around monetizing their online presence, their brand partnerships and sponsorships, sometimes by selling products or services directly. What do estate planning professionals need to understand about these innovative influencers and content creators and their business models?

ACTEC Fellow Shaina Kamen of New York City, New York, joined by guest Kimberly Cook of Chicago, Illinois, to help us understand how to advise clients who are engaged in this type of business. Welcome, Shaina and Kimberly.

Difference Between an Influencer and Content Creator

Shaina Kamen: Thank you for having us. So Kimberly, can you tell us what is an influencer and a content creator? And can you give us some examples?

Kimberly A. Cook: Thank you. Yeah, sure. A content creator is an individual who produces digital media. So we’re thinking about things like images, videos, blogs. They actually just kind of produce or put together the actual content. An influencer is a type of content creator, but they have a large kind of following or grouping, and, by extension, then they influence their audiences in the product or services by which they are otherwise promoting. The main difference really is your level and following in terms of your audience. That’s the difference really between an influencer and a content creator because influencers in and of themselves are creating content they just, by extension, are getting their audience to actually do some sort of action, right? So that’s purchasing or voting, or it may be that their content is actually pushing.

In terms of examples, this would be anybody from a YouTube personality, TikTok personalities, or your kind of, Instagram influencers. Certainly, famous ones being Kylie Jenner is a huge influencer. All celebrities are influencers. And then you have anybody from Ryan – who is a kid who is an influencer who sells and creates products related to kind of being a kid. And then you have animal influencers. My favorite happens to be Indy, who’s the cockapoo. He obviously is a pet influencer, but his content is focused on the life of a very active cockapoo.

Shaina Kamen:  Adorable, how is content monetized and how lucrative can it be?

Potential Revenue of an Influencer

Kimberly A. Cook: Yeah, first thing, there are various revenue streams depending on the platform that one is looking for. So we’re talking about affiliate marketing, sponsorships, ad revenue, and then merchandise sales. It can be extremely lucrative depending on the influencer’s audience and platform.

So you can have someone who has, a business that is focused on and maybe they sell, you know, products related to plants and plant based products that could be, you know, really lucrative depending on their audience or if they have, say, a brand relationship with someone like John Deere or a local grocery chain. So, there is huge potential in your revenue abilities and it really depends on what your relationships are and also the amount of streams that you have going for you based on your content.

Shaina Kamen: How are these businesses typically valued?

Valuation of an Influencer’s Business

Kimberly A. Cook:  That’s the challenge, right? Generally speaking, your valuation is going to be tied to your personal brand. As lawyers, we know that, you know, when you’re thinking about valuation, the first thing we’re thinking about is, is this something that can continue if this individual is no longer a part of the content creation? Are they the face of the brand or is it a standalone?

It’s really going to depend on the type of relationship that the influencer has with their branding companies or sponsorship. If they are the face, then certainly the value of their product and revenue that are tied to them may diminish or otherwise decline if they are no longer the face. That’s going to be different than if they’ve established a relationship where the products and services are their standalone.

One of the factors, obviously, to include when you’re thinking about valuation is going to be, the follower count, the engagement rate across the platforms and whether these streams have been monetized in differing ways. So now, have we marketed in such a way that we have merchandise? Are we able to put the person aside from the product? Think about Amazon; while we know that Jeff Bezos is the owner of Amazon, if Jeff is no longer associated with the company, the company in and of itself has a value.

So when we’re looking at content creators and influencers as it relates to what they are promoting or the value associated with their brand and content, it’s how much can we separate the individual from the actual product and service. That’s going to increase the overall value.

Shaina Kamen: So interesting, how are these sorts of businesses evolving? Have you seen any new trends, any old trends that have or died? Is blogging still a thing? Tell us more.

Evolution of Influencers and Social Media Marketing

Kimberly A. Cook: Yeah, sure. It is ever evolving as with anything dealing with technology, right? Something can be old news from five minutes ago, right? So, it is an ever-evolving thing.

Absolutely, is bogging still a thing? Yes, for certain content, right? If you are in, say, personal finance, if you are in areas by which people are still going online in a how-to kind of format that doesn’t really translate well into a two or three-minute video, then blogging absolutely is very helpful. But blogging is still also helpful for, you know, SEO purposes. Being Search Engine Optimization – how visible are you out there?

That said, platforms that are doing great right now are those kind of short form platforms. Think of TikTok and Instagram reels; those things have taken over long-form kind of blogs or even longer videos. But we know that, you know, as with anything, there is a sunset on those platforms as well. And what we’re starting to see now is a real increase in interest in subscription-based platforms and services where people get exclusive content that is paid.

Without getting too risky, I think the one that a lot of people know about would be OnlyFans, right? You get exclusive content from the content creator, but for a paid subscription, that’s going to be different than something that’s generally out and available. There is an ever-evolving change when we think about what platforms, what’s hot and now and that is a challenge for content creators and influencers because they’re constantly battling with what’s the new platform. How are the algorithms going to otherwise impact my audience and my reach to my audience?

Shaina Kamen: Kimberly, can you tell us about some of the legal issues and complexities of influencers and content creators in general, in the family law setting? What about things like divorce, prenups, alimony, and child support? How does all of that factor into the influencer’s lifestyle and career?

The Intersection of Family Law and an Influencer Career

Kimberly A. Cook: A lot of, know, the legal issues really stem from volatility and variability of the sources of income because you can have influencers or a content creator who might be focused on seasonal things. So here we’re entering into, say, a holiday season. That might be a high time for them where their traffic is really high, where their sponsorships and ads, they can command a higher rate because maybe Christmas, Halloween, Thanksgiving, – that’s their content. That’s their real high time. But the rest of the year, they’re not making those same levels.

When we think about things like, you know, alimony, when we think about child support, it can be very challenging to kind of determine what their actual income is because of the varying nature. When we think about things from the context of a prenup or a postnup, you know, the challenge oftentimes for influencers and content creators is:

  • First, make sure that you understand digital assets and how they can be captured.
  • Work with an IP (Intellectual Property) attorney to make sure that the content creator or influencer has trademarked, have their licensing, has things in the ownership interest, and rights to their social media platforms to their names and to the content that they are actually pushing out. That way those things can then otherwise be captured in your prenup or in your postnup.
  • Another thing to keep in mind is what’s hot today may not be hot tomorrow. And again, it can be very challenging to assign a value, whether that’s for the purpose of property allocation or for the purpose of income determination. It can be very challenging when, this year, somebody is not the cool, hot, trending, known content creator or influencer. Maybe they haven’t been viral this year, but last year they were. So it’s really important for lawyers to understand what it means to be an influencer and what their responsibilities are but also the history of this individual’s platform. And then from there, you can kind of put in, I think, some parameters to help gauge what makes the most sense as it relates to a determination of the income.
  • And the last thing I would, you know, certainly say is also want to understand where the content is being shot or whether or not it’s tied to family or your children. So, if your platform is built on being a stay-at-home mom and a lot of the content deals with your life being a mother, and now here we are at the time of a divorce, and we now have to take into consideration a parenting schedule or how your content can impact the divorce. Those things have to be taken into consideration.

So there are a lot of things that lawyers have to think about. There are a lot of questions that must be asked when you’re working with your client who says, I’m a content creator, or some people call me an influencer. Don’t take those things lightly because it can be very valuable, but certainly can certainly impact the outcome of divorce on both a financial as well as on the parenting side.

Considerations for Estate Planning Professionals with Influencer Clients

Shaina Kamen: Thank you. Kimberly, you just spoke a little bit about how some of the tools in your family law toolbox, like prenups or postnups, can protect or change the otherwise state-ordered division of assets in the event of a divorce. From an estate planning perspective, the unique business model and asset profile of the influencer also present very special challenges. And there are a number of issues that we’ll typically consider when we are embarking on this type of engagement.

Domicile Planning

The first consideration that we really look to with influencers is the importance of domicile planning. So domicile is one of the most important issues for many influencer or celebrity clients because establishing a domicile in a low or no income tax date can result in a really significant lifetime income tax savings, as well as potentially state-level estate tax savings at death.

The law of the state where the influencer is domiciled at death will govern the postmortem use of the influencers’ right of publicity. That’s their right to monetize their persona or image to control and profit from the use of their name, likeness, and persona. So if it’s anticipated that the influencer may have a valuable persona or image postmortem, practitioners who are working with influencers should be sure to evaluate the applicable right of publicity statute in the state where the influencer is domiciled. It may be that as part of the planning exercise, the influencer will think about establishing a domicile in a state that clearly recognizes these valuable postmortem rights and offers the opportunity to their fiduciaries to exercise the rights and monetize their persona for an extended period of time.

Privacy Planning

The next consideration with planning for influencers is that privacy is paramount. And so while influencers are basically overexposed and they’re well known for their willingness to lay bare their personal lives in order to attract followers on Instagram and TikTok, and maybe OnlyFans, the authenticity and brand partnership is really cited as one of the primary factors that drive the influencer’s success. But from an estate planning perspective, does this transparency extend to publicly sharing information about the influencer’s estate plan? Probably not, right? Wills are a matter of public record in most states, and they can be very easily accessed by third parties.

In New York, you can go right into the records department of the surrogates court, type in someone’s name and up pops their will. And so for this reason, in planning for influencer clients, using a standalone will is probably not the ideal planning technique. You’d want to consider using a pour-over will coupled with a revocable trust because that technique offers a number of privacy benefits to the influencer client. Unlike the will, the dispositive terms of the revocable trust are generally not part of the public probate record, and if the revocable trust is funded during the influencer’s lifetime with their assets, probate may be bypassed altogether, which gives another layer of privacy.

Management of an Influencer’s Trust

There’s also a management component to using a revocable trust for influencers because if the influencer becomes incapacitated, the trustee of a well-funded revocable trust can immediately step in to continue to manage the influencer’s affairs and businesses without court involvement.

Digital Asset Planning in an Estate

Another planning consideration for influencers is: don’t forget about their digital assets. Influencers are really unique clients from an estate planning perspective because they have digital assets with significant value, right? Email accounts, social media accounts, photos, website domains, and even blogs are paramount to their business.

These digital assets typically do have significant value and that value will be lost entirely if the influencer’s fiduciaries can’t access and manage the property. The Revised Uniform Fiduciary Access to Digital Assets Act, or RUFADA, has been adopted by most states at this point in varying forms and that recognizes the existence of digital property as a property right that can be accessed and managed by third parties, including fiduciaries.

So if you’re working with an influencer on their estate planning, you should become familiar with your state’s version of RUFADA and make sure that you incorporate RUFADA provisions into the influencer’s planning documents.

Influencer Succession Planning

The last sort of consideration with influencer clients that we’ll touch on is don’t overlook succession planning. At the end of the day, as Kimberly discussed, influencing is a business and it’s a profitable business. And for some influencers, they’re able to make the leap from monetizing their persona simply through ad revenue and collaborations to having their own brands entirely in a variety of areas. We see housewares, clothing, makeup lines, pet products, and more.

So, overlaying succession planning with estate planning is an integral part of the working relationship with the influencer. We’ll see this come up a few ways. As Kimberly mentioned, sometimes an influencer is involving their children in the videos, the ads, the content, and there’s a desire to protect the business and pass it on, to the extent viable, to the next generation. It may be that the influencer just wants to build their own brand and stick with it over time. And we also are now seeing trends with influencers where they’re building a brand, getting outside of their investments, or even looking to a liquidity event or an exit all together.

From an estate planner’s perspective, an influencer’s portfolio, especially early on, can present really fantastic opportunities from a valuation perspective to engage in more sophisticated estate planning strategies, like transfers to SLATS, dynastic trusts, or even upstream estate planning techniques. For example, influencers are often compensated in part with stakes in newer companies that they’re promoting that have a low value, and the value of their own business may be initially low to start. These assets from an estate planning perspective, are very ideal for planning because they’ll have a low value appreciation potential over time. The more typical estate planning tools that we see as practitioners, from SLATS to dynastic trusts, should all be part of the discussion for business succession planning purposes when you’re working with the influencer.

So, Kimberly, do you have any other advice for advisors who are working with influencers?

Collaboration Between Estate Planning and Intellectual Property Attorneys

Kimberly A. Cook: Yeah, I think you have to understand the platform that your client is working on. I think it would be really helpful to engage with, certainly address a trust and estate lawyer but also an IP attorney to really understand all the different components and nuances that can be impacted. If you are working with someone, whether it’s at the prenup stage or at the divorce stage.

I think it’s a real learning opportunity because this is an ever-evolving area for all of us. But it’s really important to understand the tools and resources that we have available under the laws that we currently have available and how to best protect our clients. So, it’s really the opportunity to really understand your client’s unique role and their assets as a part of helping them protect.

Travis Hayes: Thank you, Kimberly and Shaina, for enlightening us on the legal and tax considerations involved in representing social media influencers and content creators.

Additional Resources:

Resource to Share with Your Client

What is a Prenuptial Agreement?

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