MoneyWatch

If L’Wren Scott’s company was broke, why did she have millions?

March 28, 2014 / 3:24 PM EDT / MoneyWatch

At first glance, it seems incongruous: the owner of a reportedly broke business is able to grant a multi-million windfall at her death.

But in the case of L'Wren Scott, the fashion designer who was found dead earlier this month after an apparent suicide, there may be a clear-cut answer to the apparent oxymoron of a rich owner running a broke business.

L'Wren Scott, fashion designer, found dead 17 photos

L'Wren Scott's fashion line was allegedly in financial turmoil, with Cathy Horyn writing in The New York Times that the designer was planning on closing her business. Other reports said the fashion line was $6 million in debt, an allegation that her company called "highly misleading and inaccurate." But even if her company was struggling, Scott herself could have been in fine financial health.

Fashion designer L’Wren Scott dead of apparent suicide 00:25

"It is quite possible for an individual to have significant personal assets even though they own a company that is insolvent," Alan Solarz, a partner at law firm Bryan Cave, wrote in an email to CBS MoneyWatch. "This is because most businesses are corporations or limited liability companies, which under state law provide that the owners are not personally liable for the debts and obligations of the company."

Scott's personal estate was valued at $9 million, according to the New York Daily News. A three-page will directs all of her "tangible articles of a personal nature" to go to Mick Jagger.

Still, there may be taxes due on her estate, notes Edward Peck, also of Bryan Cave.

"The federal estate tax exemption is $5,340,000 and the NYS exemption is $1,000,000. If you assume that she hadn't guaranteed her company's debts and her net assets are about $9 million, then her total estate taxes would be just over $2,000,000," he notes.

But, Peck adds, if her estate were liable for the reported debts, it's possible "her taxable estate would be reduced by the debts to $3 million and the estate taxes would be about $182,000."

Scott's company didn't immediately respond to a request for comment.

While her personal fortune might have been separate from the financial health of her business, questions still remain.

Among them:

1. What is the financial state of her fashion line? Her company, in a statement sent to WWD, said Scott was "considering a restructure of her global business," although it denied she was planning on shutting it.

2. Who paid her company's 2013 taxes? The business' taxes were paid online by an undisclosed party on March 12, just a few days before her death, according to WWD.

3. Will the company continue without Scott at the helm?

4. What role might Mick Jagger have in the company? And did he inherit a business ownership in the company?

Scott's main asset was her Manhattan apartment, a Chelsea condominium which was worth $8 million, the NY Daily News notes. Jagger, meanwhile, has an estimated net worth of $305 million, according to Celebrity Net Worth.

Of course, for friends and fans of her fashion line, the biggest mystery of all might be why the talented designer took her own life.

Aimee Picchi

Aimee Picchi is the associate managing editor for CBS MoneyWatch, where she covers business and personal finance. She previously worked at Bloomberg News and has written for national news outlets including USA Today and Consumer Reports.

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