A commentator in a news article from earlier this week discussing the convoluted estate of pop legend Prince — it’s probably unobjectionable to anyone to simply call the Purple One’s estate a mess — notes that there are essentially three entities involved in many estate matters. Namely, those are family and close acquaintances, charitable organizations and government tax authorities, respectively.
Guess which one prevailed big time once the smoke finally cleared regarding the details of the famed performer’s estate?
Your guess is correct, and it doesn’t include mention of Prince’s relatives.
Rather, it is the Internal Revenue Service and Minnesota regulators that will be recipients of what is estimated to be about a $100 million windfall created by the artist’s failure to execute a will and take other planning measures that could have ensured a considerable level of lawful tax avoidance.
Astoundingly, Prince never wrote a will (at least one cannot be found). Moreover (and just as importantly), he never set up any trust vehicles, which would have sheltered money from the reach of state and federal tax collectors. As a result of that failure to plan, roughly half of Prince’s estimated $200 million estate will go by default to federal government and Minnesota state coffers.
Estate planners commenting on the Prince situation state that the details provide a cautionary note that goes far beyond merely sounding the need to plan judiciously to avoid taxes. Establishing trusts enables a planner to keep details far more private than is the case where estate matters are disseminated to the public through the probate process.
A central bottom line concerning Prince’s death and the ultimate distribution of his estate is this: Scores of millions of dollars could have ended up in the hands of other than tax collectors.