The world was shocked and heartbroken to hear of the untimely and sudden death of music icon, Prince last month. Prince’s career spanned three decades and involved selling more than 100 million records and amassing an estate reportedly worth more than $350 million. In addition to that, record sales in the wake of his death skyrocketed by almost 400%. Furthermore, it has been reported that his estate includes unreleased music that could net an estimated $400 million. Needless to say, he left behind a massive estate.
Days after his private memorial service, we learned of the possibility that Prince died without a will. It might seem shocking that someone who had such a massive estate without a wife or children would die without a will. However, as a trusts and estate attorney, I wasn’t surprised; this is a very common scenario in my line of work. I often see people with significant estates, and yet, no will or end of life planning.
“Estate planning is not only for rich people, it’s also for people people, people!”
While estate planning and preparing for your death is a morbid task it is a necessary one.
In Prince’s case, his sister Tyka Nelson has reportedly filed papers in Minnesota Court, asking to be appointed representative of his estate. With both of Prince’s parents dead and with no known descendants, Tyka, his full sister is an heir to his estate. Prince also has four living half-siblings from his parents’ other marriages and relationships. Under Section 524.2-107 of the Minnesota probate code, half siblings inherit the same share as full siblings. And if any of his predeceased siblings had children, those children would inherit their parents’ share. This could present a problem in that some of the heirs may simply want money and the other heirs might want to preserve the property, real estate, and memorabilia. The process of determining how to divide the estate could come with a hefty price.
In addition to being a musical genius, Prince was known for his activism and secret philanthropy. He reportedly donated $12,000 to a library in Louisville, Ky., to keep it from closing. In 2015, he put on a benefit concert to support the Black Lives Matter movement and supported many other local and national charities. It is very possibly that in his death, he would have wanted many of those causes to benefit from his estate. Unfortunately, without a will, none of those causes stand to benefit directly. Any donations will come only at the behest of his siblings.
Even if we were to assume his siblings can agree on how to divide the estate, it isn’t only a question of how much each one is entitled to. At $350 million, Prince’s estate will be subject to both federal and state estate tax, which will come out of each heir’s portion. If there isn’t enough cash in the estate to pay taxes, it could mean the heirs will have to sell some of the estate property. And if his siblings would like to carry on his philanthropy and donate a portion of his estate to charity, it would not reduce the estate tax. On the other hand, if Prince had left a portion of his estate to charity, the estate tax would have been reduced.
While most of us (99.5% of us actually) will not die with $350 million estate, some level of estate planning can be valuable for everyone. I recently heard someone say: “Estate planning is not only for rich people, it’s also for people people, people!” This is true. I’ve seen families broken up over a $50,000 estate. Everyone doesn’t need a complex will or trust, but I can guarantee that foregoing estate planning altogether is likely to waste a good portion of your hard-earned assets, which could be left to a long drawn-out unpredictable court battle.
Estate planning is more than just determining who will get your property after you die, it involves important decisions such as funeral arrangements, naming a guardian for the care and property of your young children, and protecting your children from a previous relationship.