In my last newsletter, I wrote about the passing of several musicians this year, including Glenn Frey and David Bowie. Sadly, another great has passed away. Prince’s music is loved the world over.
While, I hope that the cause of Prince Nelson’s death will have a profound influence on the national conversation on prescription pain killers, it is the fact that he died without a will that I want to highlight.
When Prince died at age 57, his net worth was approximately $300-500 million. He was not married at the time of his death and his only known biological child died of natural causes as an infant.
So what happens to Princes estate?
Under Minnesota law, if Prince has any natural children they will inherit 100% of the estate. If not, his several half-blooded brothers and sisters would have the same standing as his one full-blooded sister, Tyka Nelson, and they would all be equal beneficiaries of the estate.
Already, there was a man who has come forward claiming that his mother had an affair with Prince and that he is a biological child. A paternity test will settle the issue, however, I envision a long line people in their 20’s claiming to be Prince’s long, lost son (or daughter). For someone as meticulous in guarding his privacy and known for maintaining legal control over his music, I doubt whether this was his intention.
Prince is not alone. According to legal source LexisNexis, approximately 55% of American adults do not have a will or other estate plan in place at their death.
If Prince would have done some basic estate planning, he would have created a trust that owned his royalty rights and the other assets in his “vault”, and named a trustee of the trust that would be in control. Any legal issues about his work and future release of songs would be handled in private.
If he had wanted to protect his family, he would have created a trust. Perhaps he would have created sub-trusts for each beneficiary to protect against creditor risks, divorcing spouses, lawsuits, bankruptcy and other creditors. He may have considered other types of trusts including a generation skipping trust or even a private foundation and other charitable trusts.
(Uncle) Sam is the biggest beneficiary.
According to calculator.net, the federal estate tax on an estate of $300 million, is approximately $117 million for 2016. With appropriate estate planning this figure could have been significantly reduced.
Lessons to be learned: If you love someone and want to make it less stressful for them when you die, it is best to get your estate in order.
You may want to call your estate planning attorney to schedule a review of your existing trust and beneficiaries. Estate tax laws have changed.
Or if you need to get started and want to have a will or trust drafted, let me know. Most people prefer not to talk about death and taxes, neither their inevitability nor how to plan for them. As a financial life planner for the past quarter century, I have learned how to engage clients in a healthy conversation on these issues.
It is in your best interest to have your estate planning part of your financial planning. With your planning intentions and wishes clearly expressed as part of you financial and estate planning, it will be easier to bring the estate planning attorney into the conversation and on your team to draft the appropriate documents.