Unfortunately, according to Prince’s sister, Prince may have died without a Will or trust.  His estate has been estimated at between $150-$300 million.  If Prince did pass away without a Will or trust (i.e., without an estate plan), what will happen to his estate (i.e., his assets and debts)?  Prince’s estate will have to go through probate court to determine who will own and manage the assets he left behind, including his music rights, which will continue to bring in millions in the future (at least 650,000 albums and 2.8 million tracks have been sold just since his death a few days ago).

Probate Pains

It appears that Prince’s sister and five half-siblings are the “next of kin” entitled to inherit his estate.  Now the court and surviving family are left to sort things out.  Without a Will or a trust, the estate has a much higher likelihood of getting caught in court for years and costing the estate and heirs millions more (mostly in attorney’s fees) than would have been the case if Prince had created at least a Will.  If he had not just created a Will, but also prepared a revocable living trust, he would have likely saved millions more for his beneficiaries in legal fees and minimized year-long delays and potential family conflicts, while keeping the process and results private.

Business and IP Management Sorrows

What complicates matters more is the management of his business, including his copyright and trademark intellectual property assets.  Sorting out the ownership and control of these rights through the probate process will be particularly time-consuming and costly for his heirs and lucrative for the lawyers handling his estate’s probate process.

Tax Woes

If Prince didn’t have an estate plan, his estate will be subject to federal estate taxes.  At a 40% tax rate, Prince’s estate could owe $60-120 million in estate taxes, and maybe more, given how well his music has sold since his passing.  Fortunately, like in Ohio, Minnesota doesn’t have its own estate or inheritance tax, so that’s a plus for his beneficiaries.

Charity Losses

But it appears that Prince was an active philanthropist, making “humanity” his cause.   Sadly, if Prince didn’t have an estate plan, he may have missed his biggest opportunity to give the largest financial gift of his life through charitable gift planning.  Such planning would not only have helped his chosen charitable causes, but could have saved tens-of-millions of dollars in estate taxes and millions more in income taxes.

Purple Rain of Legacy Planning

Although my clients don’t have anywhere near Prince’s level of assets (or his Paisley Park property), I see many of these same costs in central Ohio that his family may bear due to a lack of estate planning to avoid a long, tedious, and costly probate process.  I still have a glimmer of hope that Prince’s family will at least amicably divide his estate and carry on his legacy of philanthropy, but past experience has shown that it only takes one potential heir to create a nightmare scenario that will rain down sorrow and pain, instead of bathing in purple rain.  If you want to discuss how you can correctly pass on you legacy, minimize conflict among heirs, and connect with loved ones through your estate planning, contact Whitney Counsel for a free consultation.