Music legend Prince’s mysterious death continues to cause speculation as all of the details regarding his estate plan, or lack thereof, have yet to emerge. Prince reportedly amassed a fortune worth at least $300 million and his estate is expected to have an equally impressive future income stream. The estate stands to profit from the posthumous records sales that have soared since the star’s death, as well as “a trove of unreleased recordings” rumored to be in what Prince called, “the vault.” However, the future of Prince’s estate and legacy will depend on whether he created an estate plan.
Proper estate planning guarantees that your wishes are honored after death and the failure to do so may lead to unintended consequences. In Prince’s case it means that his sister, Tyka Nelson, is likely to inherit a large portion of his estate. Reportedly, Prince had a strained relationship with his sister, who at one point was allegedly addicted to crack cocaine and resorted to prostitution to support her children. It is unlikely that Prince intended for a substantial portion of his estate to pass on to her without a mechanism to distribute assets over time. Nevertheless, without the proper estate planning documents in place, this is the likely outcome as Tyka has indicated that the rock star died without a will.Although, Prince was a gifted artist who had a special talent for business, if it is confirmed that he did not have an estate plan, then all of his efforts to retain control of his intellectual property and maintain his artistic purity, may have ended when he died. In all likelihood, his careful and loving curation will turn into the opposite of what he wanted—the appropriation of his art and his name solely for money and without regard to his artistic vision.
In addition, without a proper estate plan the causes and charities Prince cared about will no longer benefit from his compassion. Prince was quite the humanitarian and his impact on the world transcended music. The star was the driving force behind organizations and groups such as #YesWeCode and “Green for All,” and even had a charity, Love 4 One Another. Prince’s impact on these organizations may be jeopardized by his failure to properly account for them in an estate plan.
Moreover, it is imperative that high net worth individuals have estate planning documents because it allows for the opportunity to minimize tax consequences. A sophisticated estate plan can reduce the tax burden on the estate and allow for a greater portion of assets to pass to one’s heirs. Without the proper estate plan, Prince’s estate will be subject to the full extent of federal taxes and state taxes imposed by his state of residence, Minnesota. This means that roughly half of Prince’s estate could go to the government as the estate will be subject to a federal estate tax rate of forty percent and a Minnesota tax rate of sixteen percent.
A proper estate plan could have avoided many of these issues and guaranteed that Prince’s legacy would be honored appropriately. Protect your legacy and avoid the many pitfalls of passing away without a will, if you or someone you know is looking to create an estate plan the experienced team at Chepenik Trushin LLP, can work with you. Please do not hesitate to contact us for an initial consultation.