Lessons Can Be Learned From Prince’s Estate
The musician Prince died on April 27th without a will.
Prince’s estate has been estimated to be worth at least $300 million. When a person dies without a will (known as “intestate”), state law governs who inherits that person’s assets. Prince died as a resident of Minnesota, so Minnesota intestate law will control how his assets will be distributed. With no spouse, no known children and no living parents, Prince’s sister, five half- siblings and the daughter of another half-sibling who previously died could all share the assets of the estate equally. However, according to reports in the news, more than twenty other people have come forward claiming to be intestate heirs of the estate.
It is surprisingly common for people to die without a will, even those who have substantial wealth. Dying intestate can lead to significant unintended consequences.
If Prince had a will, he could have provided for his siblings and their children by leaving assets to them in trusts rather than leaving his estate to them outright. In this way, his relatives could have had effective control over their trusts, but at the same time their inheritances could have been protected from creditors, spouses and future death taxes.
The government will receive the largest share of Prince’s estate in the form of death taxes. The federal estate tax rate is 40%, and the maximum Minnesota estate tax rate is 16%. It is possible that some assets of Prince’s estate, including his music rights, may have to be sold to raise funds to pay the tax bill. If Prince had a will along with a well thought out estate plan, a significant amount of death taxes would likely have been saved.
Prince was apparently very charitable during his lifetime. He was reportedly very supportive of his church, and he had a private charitable foundation. No charitable organizations, including his church and his foundation, will receive any of his estate because he had no will. It seems unlikely that this is what he would have wanted.
By having a will, Prince could have chosen the executors and trustees who he thought had the expertise to properly administer his estate, particularly his music catalog. The costs of administration of his estate will likely be significantly greater than they would otherwise have been if he had a will.
Prince was a very private person and a very competent businessman who closely controlled his affairs. Because he had no estate planning documents, the administration of his estate will be a very public process detailing his private affairs for the entire world to see, which is not likely what he would have wanted.
Most people don’t look forward to confronting their own mortality. However, important lessons can be learned from Prince’s estate about the importance of establishing a well thought out estate plan and then keeping that plan updated. The attorneys of our firm’s estate department have had many years of experience helping our clients accomplish this important task.
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