The recent tragic untimely death of pop singer Aaron Carter, at just 34 years old, once again brings to light the addiction and mental health struggles that so often plague young stars. Unfortunately, these struggles often go hand in hand with family discord and mismanagement of a young star’s earnings.
Carter rose to fame in the 1990s, following in his older brother’s footsteps, Backstreet Boys member Nick Carter, releasing his self-titled debut album at just age 9. Fast forward to Carter’s 18th birthday, in 2005, when he learned that he only had some $2 million in his account waiting for him and that he owed some $4 million in taxes. As a result, in 2013, Carter decided to file for bankruptcy in hopes of a fresh start, largely riddled with tax debt owed to the Internal Revenue Service on his income from the height of his popularity as a child star as well as creditor debt. According to court documents, Carter’s net worth at the time was listed as only $8,232.16, $60 of which was cash and the rest personal belongings such as a Breitling watch and computer equipment. His liabilities totaled $2,204,854, which included a $31,166 credit card bill.
Mismanagement of Funds
Who’s to blame for such gross mismanagement of Carter’s funds? As Forbes aptly put it, Carter was old enough to earn millions but was, understandably, likely too young to recognize the financial ramifications of his income. The responsibility of his finances hence largely fell on either his parents or management team.
California has something called the “Coogan Act” in place, which is a law designed to protect child performers and to safeguard a minimum of 15% of the child’s gross income (and therefore not reduced by management, agent or other fees) for when they reach the age of majority, as well as protect them from exploitation and abuse. “Although the income earned by a child performer is legally recognized as the child’s property, the individuals in control of the earnings, typically parents, have considerable leeway with the funds that are not set aside in the Coogan Trust—so there’s still a lot of room for mismanagement of that remaining 85%,” said Marc M. Stern, a partner in Greenberg Glusker’s Private Services Group in Los Angeles.
That leeway was the root of the problem for Carter, who has publicly feuded with his family, including his mother, Jane Carter, who was once his manager. He’s accused her of taking more than $100,000 out of his bank account. Carter also spoke out following the news of Britney Spears ending her conservatorship 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 some $500 million of his earnings on houses and cars and that he never got a cut of any of the profits when they started selling them. He’s also sued Lou Pearlman, a member of his childhood management team, for fraud as well as an accounting of royalties owed.
When it comes to preventing mismanagement of a young star’s assets, “[t]here really aren’t any surefire protections,” opines Stern. “Aaron Carter’s story is an example of how legal protections fall short—Carter alleged during an appearance on Oprah: Where Are They Now? that his parents never set aside the 15% of earnings required by the Coogan Act. The bottom line is if people aren't going to follow the law and court orders, there’s not much that can be done. Carter even hoped to create his own law to further protect young stars, what he referred to as the ‘Carter Law,’ and help distribute childhood earnings in increments over the individual’s adult life,” he added.
“Clearly, Aaron Carter recognized how the system had failed him, and he hoped to help others avoid that same fate. We see this type of unfortunate outcome even in more extreme cases, like that of Britney Spears. Spears had a court-appointed conservator, her father, who was required to periodically file accountings with the court, and she nevertheless accused him of enriching himself at her expense while he served in that role. The best solution is one that most children don’t have the power to control, surrounding yourself with people who won’t take advantage of you, including your parents,” concluded Stern.
At the time of his death, it’s estimated that Carter was worth some $400,000. According to reports, in 2018, he purchased a $430,000 home in Lancaster, Calif., which he had recently relisted for sale. In an interview with Oprah in 2016, Carter claimed that at the peak of his career he was worth some $200 million—a staggering example of what can happen when assets are mismanaged or squandered away.
Planning for Addiction and Mental Health
Carter was also vocal about his mental health and addiction struggles. Planning ahead can be a helpful tool to deal with these issues, but unfortunately, many people who need assistance in these types of situations don’t acknowledge that they need assistance, according to Stern.
Ways to plan ahead include granting management powers to an agent under a power of attorney or establishing a revocable trust with a trustee to manage their property for them. A conservatorship is another possibility.
“While I believe that conservatorships can save lives and protect vulnerable adults in crisis, sadly, I don’t believe it was a viable option for Carter,” said Benny Roshan, partner and chair of Greenberg Glusker's Trusts and Probate Litigation Group in Los Angeles. “For one thing, Carter was openly opposed to a conservatorship and felt betrayed by his partner, whom he suspected was plotting a conservatorship with his siblings a year prior to his passing. His public statements about his family during that time may have deterred any efforts by his family to conserve him for fear of escalating his crisis. Also, any efforts to conserve Carter would have been met with heightened scrutiny given the public outrage over Britney’s botched conservatorship,” posits Roshan.