There has been a lot of chatter and speculation surrounding the death of music legend Prince. The latest detail to come out after the singer’s death is that he apparently died without a will, essentially leaving his $300 million estate up for grabs. So what happens with his fortune and future royalties?
Dying intestate can certainly leave quite a mess for the family and courts to clean up. In Prince’s case, it may be years before an accurate value of the estate can be determined. Then the intestacy statute (in Minnesota for Prince since that is where he resided and the bulk of his estate is located) will determine his heirs at law – likely to be his siblings as his parents are no longer living and he does not have any surviving children. Another unfortunate fallout of Prince’s untimely passing without a will is that the value of his estate will be drastically reduced due to State and Federal Estate Tax. He had no protections in place to protect his estate from taxation. The 2016 Federal exemption amount is $5.45 million individuals, less lifetime taxable gifts. Such a large estate is subject to the top taxation bracket at a whopping 40% in 2016. This means that Prince’s estate is likely to pay over $100 million to the Federal government in taxes. Ouch.
What could the beloved musician have done to protect his hard earned assets? The simplest solution would have been a trust. Trusts are excellent estate planning tools that provide individuals with flexibility in distributing their estate, as well as a number of protections (from creditors and taxes, and from prying eyes as trusts generally do not become part of the public record). The musician could have also laid out charitable contributions, which would certainly reduce the estate’s tax liability. One will never know why such a high profile figure with such a vast estate did not engage in even the simplest estate planning, but let this be a lesson to us all: tragedy can strike at any time and we should be prepared.
Rest in Peace, Prince Rogers Nelson.
THIS POST WAS WRITTEN BY ATTORNEY CATHERINE TAYLOR. IT IS INTENDED FOR INFORMATIONAL PURPOSES ONLY. IT IS NOT LEGAL ADVICE.