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September 21, 2020

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Estate Taxes, Prince Dies Intestate: Even Musical Geniuses Sometimes Miss a Note

Prince is acknowledged as a musical genius, with fans, fame, record sales and a net worth to prove it.  But for all his genius, he apparently died without a Will. Without a Will, Prince’s assets pass according to the estate plan created by the state of his domicile. Under Minnesota law, without a spouse, children or parents, assets pass to siblings, including half-siblings. Prince had several of them.  Who knows whether that was his intent. Time also will tell whether Prince had children, which as mentioned above would alter the disposition of the assets.  With an estimated $300 million (before estate taxes) at stake, not to mention perhaps another billion dollars flowing into the estate post-death – think Elvis and Michael Jackson - could this be the biggest estate mess since Howard Hughes?

Speaking of estate taxes, the primary estate beneficiary may be the IRS – it is estimated that the IRS will "inherit" over $100 million, perhaps significantly more depending on the ultimate value of Prince’s estate. In rough numbers, the IRS receives 40% of Prince’s estate.  The other significant estate beneficiaries are Minnesota, which will likely receive significant tax and probate fees, and a number of lawyers, who will be paid to clean up all details, as Don Henley would say.

What could have Prince done?  Well, in addition to leaving assets to friends and family, he could have left assets to charity instead of the IRS.  Whatever is left to 501 (c) (3) charities is not subject to estate tax. It was reported that Prince was an active Jehovah’s Witness.  Perhaps he would have preferred to leave $100 million to his Church.  Also, Prince’s home at Paisley Park was used for concerts, recording and to house his memorabilia.  Perhaps Prince could have created a 501 (c) (3) charitable Museum to receive and preserve a portion of his assets estate tax free upon his death.

I don’t know if Prince was an Opera fan, but unfortunately the fat lady did sing and it is now too late to do estate planning.  But his premature death is a learning tool for the rest of us, at least in the estate world.

As Graham Nash said, teach your children well; teach your parents well.

© 2020 Odin, Feldman & Pittleman, P.C.National Law Review, Volume VI, Number 123


About this Author

John P. Dedon, Tax, Estate Planning, Attorney, Odin Feldman Pittleman, Law Firm

John Dedon is a tax lawyer with a talent for explaining the complexities of tax law in lay terms.  Working in the estate planning, asset protection and business areas for almost 30 years, John helps clients preserve assets and plan for the future with traditional planning tools, including Trusts (dynasty trusts, intentionally defective trusts, grantor retained annuity trusts), LLC and partnership entities, and cutting edge concepts such as cryonic preservation trusts.  John also works extensively in the charitable area, creating public and private charities, remainder and lead trusts...