Prince was a powerful musical force that died in 2016, and he was a wealthy man. In addition to the property, his estate will generate income through royalties for many years to come.
Since he was such a wealthy man, you would assume he had an estate plan in place. In reality, Prince did not have a will or a trust, so he died intestate.
Estate Value for Tax Purposes
There is a federal estate tax that is a very big factor for high-net-worth individuals because it carries a 40 percent top rate. This tax is not a problem for most people, because there is a $12.6 million exclusion at the present time.
The exclusion is the amount that is exempt from taxation. The remainder is subject to taxes. Prince was a resident of Minnesota, and there is a state-level estate tax in that state. In 2016, the state-level exclusion in Minnesota was just $1.6 million.
When someone dies intestate, the probate court presides over the matter. They appoint a personal representative to act as the administrator. In the Prince case, the probate court named the banking company Comerica to administer the estate.
Comerica stated that the taxable value of the estate was $82.3 million, but the Internal Revenue Service did not agree. The IRS valued the estate at $163.2 million.
This manner dragged on in probate for years with no final resolution. In January of 2022, both parties agreed the value was $156.4 million. Six years after his death, Prince’s estate was finally closed.
Important Takeaways
Prince could have eased his tax burden by implementing estate tax efficiency strategies. He could have saved a lot of money if he had worked with an estate planning lawyer to develop a plan.
His beneficiaries did not receive their inheritance while the estate was in probate, and this was an extreme case with the six-year proceeding. Normal probate proceedings can last for at least six months. During this time, inheritances are not distributed.
The reason why we know these facts about the Prince estate is because probate is a public proceeding, and the records are available to anyone that wants to access them. As a result, there is a loss of privacy, which is another negative.
Your will would be admitted to probate. Your family would be forced to deal with the probate pitfalls. You could use a revocable living trust as an alternative. This avoids the need for involvement by the probate court.
Finally, there is the matter of unintentional disinheritances. When someone dies without any estate planning documents, the assets are distributed under the intestate succession laws of the state.
Under these circumstances, people that you would have never left out of your estate plan could be completely disinherited. Short of this, the way that the assets are distributed may be inconsistent with your true wishes.
Schedule a Consultation Right Now!
There is no reason to take any chances with intestacy when qualified estate planning assistance is just a phone call away. We can gain an understanding of your objectives and provide recommendations so you can make fully informed decisions.
At the end of the process, you will go forward with a custom crafted plan that ideally suits your needs. If you are ready to get started, contact us today. You can schedule a consultation appointment at our Oklahoma City estate planning office by calling us at 405-843-6100.
There is also a contact form on this site you can fill out if you would rather send us a message, and if you reach out electronically, you will receive a prompt response.
After helping his own family deal with a lengthy probate and the IRS following his father’s untimely death in a farm accident, Larry Parman made a decision to help families create effective estate plans designed to reduce taxes, minimize legal interference with the transfer of assets to one’s heirs, and protect his clients’ assets from predators and creditors.