Update: The Probate Estate of Prince Is An Unprecedented and Complex Mess
It has become clear over the last few months that the probate estate of Prince has become an unprecedented mess. When famed singer Prince died earlier this year, I wrote an article discussing the various issues that might come up (link: http://www.legacylawmissouri.com/prince-died-what-about-estate/ ). It is much worse that I could have ever imagined.
Prince died intestate, or without a will) on April 21, 2016. The value of his estate has been estimated to be anywhere between $100 million and $500 million. It is hard to come up with an accurate value because of the expected future royalties the estate will earn for selling rights to Prince’s vast archive of musical hits.
However, because the assets are tied up in probate, there has been some delay in getting a court order to allow the estate to start negotiating with interested companies for the rights to the music. Delay, unfortunately, is a fact of life in probate, regardless of whether the person passing away was a multi-millionaire or had just an average amount of money.
Another issue that has come up is that approximately 700 people came out as heirs of Prince within three weeks of his death. The probate court in Minnesota where his estate is being administered named Bremer Trust to administer his estate and ordered that his assets be collected, valued and that a blood sample be taken so that DNA tests can confirm or deny all of the claims of relation to the famed singer.
Now, in fairness, when most people pass away, they will not have 700 people claiming to be their heirs (that could make for a very awkward family reunion). But remember that a will would have superseded all of these claims. In other words, if Prince died and said in his will I give half my estate to Relative A and half to Relative B, none of these claims of relation would be relevant. The only recourse these people would have would be to contest the will, a difficult task in most cases.
Because of the size of his estate, federal and state estate taxes will take as much of 50% of his estate. Because federal estate taxes are generally due within nine (9) months after death, those will be due in the middle of January 2017. Estate taxes are a fact of life for the wealthy and while there are ways to delay them or to maximize exemptions, they cannot be eliminated. Nevertheless, some relatively straightforward estate planning by Prince could have minimized the losses to the extent possible.
A final element of complexity are all of the now attorney represented parties filing motions and seeking orders from the court to allow or not allow certain things to happen with the estate. This ramps up the complexity of any probate estate as most probate courts are not designed to handle estates of this size. Most people with this large of an estate (and much smaller) have a plan to avoid probate.
It’s been noted that Prince was in phenomenal condition for a man of his age (he was 54 at his death) and so he did not create a will or living trust or any kind of estate plan because he wasn’t expecting to pass away. I acknowledge that is a fair point. On the other hand, hardly any one expects to pass away at age 54….yet it happens all the time and people much younger than that die every day.
The Prince estate is a fascinating example of how a little bit of estate planning can go a long way.