Aaron Carter’s death renews focus on mismanagement of funds
The recent tragic and untimely death of pop singer Aaron Carter, aged just 34, once again shines a light on the substance abuse and mental health issues that so often plague young stars. Unfortunately, these struggles often go hand in hand with family discord and mismanagement of a young star’s income.
Carter rose to fame in the 1990s, following in the footsteps of his older brother, Backstreet Boys member Nick Carter, and released his self-titled debut album at just 9 years old. Fast forward to Carter’s 18th birthday in 2005, when he learned he only had some $2 million in his account waiting for him and owed some $4 million in taxes. As a result, in 2013 Carter decided to file the balance sheet hoping for a fresh start, largely riddled with tax debt owed to the Internal Revenue Service on his earnings from the peak of his popularity as a child star as well as debt from creditors. According to court documents, Carter’s net worth at the time was just $8,232.16, including $60 in cash and the rest in personal effects such as a Breitling watch and computer equipment. His liabilities totaled $2,204,854, including a credit card bill of $31,166.
Mismanagement of funds
Who is to blame for such mismanagement of Carter’s funds? As Forbes To put it correctly, Carter was old enough to earn millions but was, understandably, probably too young to recognize the financial ramifications of his earnings. Much of the responsibility for his finances therefore fell to his parents or the management team.
California has in place what is called the “Coogan Act”, which is a law designed to protect child artists and to guarantee a minimum of 15% of the child’s gross income (and therefore not reduced by fees management, agent or others) upon reaching the age of majority, as well as protecting them from exploitation and abuse. “Although income earned by a child performer is legally recognized as the property of the child, those who control the income, usually the parents, have considerable leeway with funds that are not set aside in the Coogan Trust – so there’s still plenty of room for mismanagement of the remaining 85%,” said Marc M. Stern, partner at Greenberg Glusker’s private services group in Los Angeles.
This leeway was the root of the problem for Carter, who publicly argued with his family, including his mother Jane Carter, who was once his manager. He accused her of taking more than $100,000 from his bank account. Carter also spoke following the announcement that Britney Spears’ conservatorship had ended earlier this year, explaining that he had been in a similar battle with his family and reiterated his previous claims that his parents had spent an estimated $500 million on his income for houses and cars and that he never had a cut in any of the profits when they started selling them. He also sued Lou Perlman, a member of his childhood management team, for fraud as well as an accounting of royalties owed.
When it comes to preventing the mismanagement of a young star’s assets, “[t]here, there are really no infallible protections,” Stern believes. “Aaron Carter’s story is an example of how insufficient legal protections are – Carter alleged during an appearance on Oprah: Where are they now? that his parents never set aside the 15% income required by the Coogan Act. At the end of the day, if people don’t obey the law and court orders, there’s not much you can do. Carter even hoped to create his own law to further protect young stars, what he called the ‘Carter Law’, and help distribute childhood income in increments throughout an individual’s adult life. he added.
“Obviously, Aaron Carter recognized how the system had let him down and he hoped to help others avoid the same fate. You see this kind of unfortunate outcome even in more extreme cases, like Britney Spears’. Spears had a court-appointed curator, her father, who was required to periodically file accounts with the court, and she nonetheless accused him of enriching herself at her expense while he held that position. is the one most kids don’t have the power to control, surrounding themselves with people who won’t take advantage of you, including your parents,” Stern concluded.
At the time of his death, it is believed that Carter was worth approximately $400,000. According to reports, in 2018 he bought a $430,000 home in Lan Caster, California that he had recently relisted. In a 2016 interview with Oprah, Carter claimed that at the height of his career he was worth some $200 million – a staggering example of what can happen when assets are mismanaged or wasted.
Planning for addiction and mental health
Carter also opened up about her mental health and addiction issues. Planning ahead can be a useful tool for dealing with these issues, but unfortunately, many people who need help in these types of situations don’t recognize they need help, according to Stern.
One way to plan ahead is to grant management powers to an agent under a power of attorney or establish a revocable trust with a trustee to manage their assets for them. A guardianship is another possibility.
“While I believe conservatories can save lives and protect vulnerable adults in crisis, unfortunately I don’t believe it’s a viable option for Carter,” said Benny Roshan, partner and chairman of Trusts and Probate Litigation Group. of Greenberg Glusker in Los Angeles. . “On the one hand, Carter was openly opposed to a guardianship and felt betrayed by his partner, whom he suspected of plotting a guardianship with his siblings a year before his death. His public statements about his family during this time may have discouraged any effort by his family to retain him for fear of aggravating his crisis. Plus, any effort to retain Carter would have come under scrutiny given the public outrage over Britney’s botched conservatorship,” Roshan claims.