The death of Prince at just 57 years of age in April 2016 left music fans in Georgia and across the country saddened. The iconic performer reinvented himself on a number of occasions during a glittering career that spanned more than four decades, but his failure to put even the most basic of estate plans into effect has benefited the federal government at the expense of his heirs. Experts say that estate taxes will claim more than half of Prince’s estate, which has been valued at about $200 million, but they also point out that this could have been prevented fairly easily with some prudent estate planning.
Prince did not write a will before he died, and this means that the bulk of his estate is subject to federal estate taxes of 40 percent. Minnesota’s estate taxes will swallow another 16 percent of the late singer’s assets. However, tax and estate planning experts say that virtually all of this exposure could have been avoided if Prince had placed his assets into trusts. Trusts also allow estates to avoid the public probate process.
Avoiding taxes is not the only reason to develop an estate plan. Prince’s heirs are expected to share his assets equally after the tax bills have been paid, but placing a dollar value on his music catalog could become a drawn out and contentious process. Michael Jackson died in 2009, but the dispute between his estate and the IRS has yet to be settled.
Sparing loved ones from inheritance disputes is one of the chief benefits of estate planning, but many individuals delay these conversations because they feel that they have plenty of time. Attorneys with tax and estate planning experience could explain how addressing these important matters can provide peace of mind, and they could also show how using trusts could reduce estate tax exposure, keep personal matters private and provide control over when and how assets will be distributed.