Prince Estate: No Estate Plan Means Devastation
“How can you just leave me standing? Alone in a world that’s so cold?” -Prince (When Doves Cry)
UPDATE (Jan 25, 2020): Certainly news of Prince’s passing is known by everyone now, but the probate court proceedings regarding his estate continue. So far, a will has still not been produced or uncovered so it appears no estate planning was ever done. This is an extreme example of intestacy (no will), but bad and broken estate plans produce undesired results too.
The federal estate tax (40%) for Prince’s estate that came due on January 21, 2017. An additional 16% to the State of Minnesota was owed on or shortly after that same date. A Minnesota probate court judge recently granted approval to liquidate a mix of homes, vacant lots and one commercial building with an estimated value of $22 million. Most of that will go towards attorney fees. They’ll need to take greater actions to address the taxes.
At last count there are two dozen lawyers involved, a number that will continue to grow, representing heirs. Probate court fees are incrementing rapidly as well. There are also other large expenses of unknown amounts (administrator companies, music business, I.P. experts, etc.), who’ve been appointed by the court.
It’s been estimated that Prince’s estate may have been worth $300 million. Some quick math illustrates that there may not be much left after all taxes and fees are paid. Probate ensures that all creditor expenses are reimbursed first; before heirs can receive anything. The IRS will become more directly involved soon. You can easily see how any lifetime of hard-earned wealth can be decimated.
Whether you speak with us or someone else about yours, please make it a priority that your estate be maximized and planned for before too long, or before it’s too late. Once done, you’ll feel better, knowing that your property will go to who and where you decide. Most of what you read here could have been avoided.
This is a cautionary tale.
Naturally, and unfortunately in Prince’s case, every story has an end. Too soon. Too young. But in life, every ending also represents some sort of a new beginning. And what occurs after we leave depends a lot on what we do or don’t do when we have the chance while here. Mistakes are meant for learning from, not duplicating. Sadly, it appears that Prince died without any sort of an estate plan or even a simple will in place; a common mistake that, for some reason, is repeated often. Tyka Nelson, Prince’s only remaining full blooded sibling, recently filed paperwork in Carver County District Court in Minnesota seeking to appoint a special administrator to temporarily oversee her brother’s estate. And the unfortunate news regarding his business affairs only begins there…
If Prince truly did die without a will, as his sister believes, his estate is going to be supervised by a Minnesota probate court, will likely come with an incredibly large tax bill and with a number of other serious consequences including extreme waste and a devastated family. Naturally, the court won’t just accept Tyka Nelson’s contention that her brother didn’t have a will or estate plan. And that’s good. After all, Michael Jackson’s will, unbeknownst to his family, surfaced some time after his death in 2009.
So Tyka is going to have to prove that she looked hard for all relevant documents and discussed the issue with the various lawyers, agents and managers that have worked with Prince over the years. It may require several months to complete that search with the proper due diligence, particularly if Prince had a number of businesses and other financial and legal advisors over the years. If an old will and estate plan is found somewhere it would probably be relating to a period during his life when he was attached to old relationships and different individuals. And, though likely less relevant to more recent circumstances pertaining to him, that will and/or estate plan then becomes enforceable.
But, if there really is no will, Minnesota statutes and federal tax code (think IRS) will dictate who gets what, and at what cost… That’s after federal and state estate taxes, legal charges and creditor bills are deducted. Prince’s estate is likely to be victimized by a very large tax bill. If, for example, the taxable estate is valued at $250 million (which seems conservative based on what we know so far), the heirs could be looking at a bill for about $135-$140 million in state and federal estate taxes, probate court, attorneys and other legal fees. In any case, it’s certain to be a huge and convoluted mess and not remotely close with what Prince would have wanted to occur.
Also, Prince was famous for wanting control of his intellectual property rights, fighting against what he felt was improper treatment by his record label, Warner Bros., and keeping his music off YouTube and all other streaming services. So instead of a will providing specific instructions, Prince’s collection of music (his legacy) is now going to be controlled by people who aren’t likely to share the level of love that he and his family had and still have for his art. Prince was also known for his generosity with money and routinely made financial contributions to several organizations, including Jehovah’s Witnesses. Unless he had a written pledge to them or other charities, those gifts will likely stop if not provided for in a will and could even lead to retroactive legal fights. At the very least, in the absence of a contribution agreement, the charities are going to receive nothing. Based on his behavior when alive it’s hard to imagine that splitting the assets evenly among his siblings with nothing going to charity and nothing in place to protect his copyrights is what Prince would have wanted. The biggest challenge won’t be dividing financial assets but rather putting a price on Prince’s legacy itself. His estate is not laden with cash. His name, likeness, image and music are where the real value resides. So what was Prince’s music and overall brand worth as of the date of his death? Who is going to value that? Be assured that the IRS is going to attempt to answer those questions. Expect that Prince’s heirs likely clash with the IRS to be very similar to the one that still continues with Michael Jackson’s estate. In that case, the IRS believes that the Jackson estate is worth far more than appraisers say it was worth on the day of his death. That’s a problem for the Jacksons and it’s probably going to be a problem for Prince too. All because smart estate maximization and planning did not occur. Then, after calculating exactly what the estate owes the IRS, his heirs are going to have to find a way to pay it. For non-liquid assets, that usually means selling off property (real estate, music rights) . The value of Prince’s estate is primarily due to the copyrights and that is definitely not liquid. The music will deliver revenue to them every year, but it’s doubtful they have $150 million sitting in cash somewhere.
Control of Prince’s property is lost. It is rumored Prince left behind enough unpublished music to fill more than two dozen new albums. They’re going to need somebody, or a couple of people, who have experience in monetizing the brand of an artist as diverse as he is. People who know how to maximize the various streams of income from intellectual property such as music. So whoever handles Prince’s estate will be dealing with paying off debts, capitalizing on intellectual property, valuing his iconic image and calculating his monetary and real estate assets – potentially in multiple states. The Paisley Park estate will be part of the Minnesota probate proceedings, but any real estate he owns outside of Minnesota will be addressed in courts local to them. After the estate is sorted, there will inevitably be lawsuits. There’s always litigation in an estate like this. Someone’s going to claim he promised them that he was going to do something. It’s too much money for that not to happen.
Why write about this?
The reason we’re writing about this at all is to explain the importance, the why and what to do to get your estate in order. Please think more about what your entire legacy is, what you want it to be and what you want to happen to it. Think well beyond your good fortune and artistry, in whatever form it is, and the other types of wealth that you’ve created. Know that a lack of estate maximization, heirs preparation and succession planning always leads to some level of devastation. So very sad, when doves cry… If you’re reading this then Prince probably had an impact on your life as he did mine. Though we might not think of it at the time, performers such as he seem to be providing the background music for our own lives. How many times have we heard ‘Party Like It’s “1999′” and so many others? Fortunately for us, Prince’s music will remain.
What happens to his assets is going to be a much different story though… In the time since his death, we’ve come to learn that he wasn’t nearly as adept at taking care of his business as he was given credit for. Because he didn’t maximize or do any strategic planning for his estate, the things he loved most, his collection of music, will likely end up in the hands of strangers. Not to mention, Paisley Park and most of whatever other assets that remain.
There’s going to be prolonged legal battles of which courts and lawyers will siphon large portions of what remains. Prince wasn’t married and didn’t have children as far as we know. He had one remaining full blood sibling, his sister. Their relationship and love for each other was very strong. And because of that, she’s going to suffer the most. I’m not trying to exploit Prince’s sad death here. I started missing him the moment I heard too. I am using this to help me educate people who have accumulated wealth though.
These things happen unexpectedly over and over because people don’t understand how the process works. Please treat your estate and the people you love with the respect that it and they deserve. Start forming a legacy protection, preservation and a “keep it in your family” mindset. We all get to come and visit here, but just for a while. And what we accomplish while on earth speaks volumes.
Decide today to not allow the things you’ve attained during your lifetime here to be for naught. Nobody should ever lose property that is rightfully theirs; especially when you’ve worked hard and earned it. Please spend some time and review the information on this website. It’s here to help you, as am I and my company.
To expand the bottom line value of your estate and dictate where your assets go, you need estate maximization and planning…
I’m easy to reach and speak with and look forward to sharing more about Kubler Financial and Estate Maximization with you. I want to help you keep control of your assets in your family…
P.S. The time you spend with me will be rewarded with ideas, perspectives and strategy you’ll receive that will help enable you and your family to preserve its wealth long into the future. After all, your holdings are yours. You worked hard and deserve to keep them in your family!
We don’t circumvent and we work well with in-place legal, accounting and all other advisor team members whenever requested or otherwise professionally and ethically appropriate.