The unexpected death of Prince shocked everyone around the world. To those of us in the financial and estate planning world, it was even more shocking to learn that he seemingly died without an estate plan. Even a month after his death, Prince’s family is still unable to locate evidence that he died with an enforceable Last Will and Testament. As a result of such a major blunder, the fate of his estimated $300 million estate lies in the hands of Minnesota state law. Rich or poor, we can all use Prince’s errors as a harsh lesson in the importance of implementing even the most basic estate plan.

 

Prince’s Property Rights

Prince was known to have been very controlling of his music. He fought to keep his music off YouTube and other streaming sites and stood up to his record label when he felt his music was not being treated properly. Those close to Prince also believe he kept a trove of unreleased records at his Paisley Park mansion. Without specific instructions in a Will or Trust, the court-appointed Administrator of his Estate will have the sole authority to decide what happens with his property rights. How the Administrator decides to control his property rights may be inconsistent with what he would have wanted to do.

 

A Fight for Control

It is likely that several of Prince’s relatives will fight for the Administrator appointment. The Administrator is the person responsible for collecting and valuing the assets, managing how the assets are managed and distributed, and periodically reporting to the court. Having so much power over Prince’s property rights will make the Administrator appointment a very enticing job for one of his family members. As a cherry on top, the Administrator will also be entitled to a large fiduciary fee. Had Prince died with a Will, he would have been able to control who could serve as his Administrator by naming a trustworthy individual to serve in that capacity to honor his wishes. Instead, the appointed Administrator may only have his or her best interests in mind.

 

No Will Means State Law Determines Beneficiaries

Under Minnesota law (much like other states), if you die without a Will, the state creates a Will for you. It assumes that you want your estate divided equally among your next closest relatives, which in Prince’s case, is to his siblings and half-siblings. If a sibling is deceased, that sibling’s share goes to that sibling’s children. Reports indicate that Prince was very generous to his long-term friends and charities while he was living. It’s likely that he would have wanted some of his fortune to go to those individuals and organizations. Unfortunately for them, they will likely inherit nothing. Instead, his wealth is subject to the claims of relatives with whom he may or may not have wanted to share his estate equally. In Prince’s situation, distant relatives are coming out of the woodwork to make their claims. As recent as last week, an alleged granddaughter of one of Prince’s deceased half-brothers made a claim for her grandfather’s share. This half great-niece is probably a person whom Prince never even knew existed. If the Court determines that the half great-niece is in fact related and is a rightful beneficiary under state law, she will inherit millions. Do you think Prince really wanted unknown distant relatives, such as half great-nieces, inheriting his estate and taking control of his music rights?

 

The Real Winners

At the end of the day, the real winners in Prince’s death are the US government, the state of Minnesota and the attorneys. The federal government assesses a 40 percent estate tax on estates valued over $5.45 million. In addition, Minnesota implements a 16 percent estate tax rate in its highest tax bracket—likely making Prince’s total estate tax liability 56 percent of the value of the estate. Attorney fees will also be alarmingly high. A complicated estate such as this one will take years to be resolved and the attorneys involved will be compensated significantly.

In conclusion, a basic estate plan could have prevented the problems Prince created. Even if you never become as wealthy as Prince, you should still have fears of your wishes not being fulfilled, an untrustworthy Administrator getting appointed, distant relatives making claims to your estate, and paying significant estate taxes and attorney fees. Contact an estate planning attorney to review these issues and get peace of mind.

 

Bill Hesch is an attorney, CPA and PFS (Personal Financial Specialist) who is licensed in Ohio and Kentucky and helps clients get peace of mind with their tax, financial, and estate planning. He focuses his practice in the areas of elder law, corporate law, Medicaid planning, tax law, estate planning, and probate in the Greater Cincinnati and Northern Kentucky areas. His practice area includes Hamilton, Butler, Warren and Clermont counties in Ohio, and Campbell, Kenton and Boone counties in Kentucky.

(Legal Disclaimer: Bill Hesch submits this blog to provide general information about the firm and its services. Information in this blog is not intended as legal advice, and any person receiving information on this page should not act on it without consulting professional legal counsel. While at times Bill Hesch may render an opinion, Bill Hesch does not offer legal advice through this blog. Bill Hesch does not enter into an attorney-client relationship with any online reader via online contact.)