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Prince's Costly Estate Mistake

Income tax

It is still possible that an estate plan for the late musician Prince might be found, although it is unlikely as friends and family do not know of one's existence. In the absence of an estate plan, it is clear that his estate will lose a lot of money, but it is uncertain how much exactly.

The estate is believed to be worth over $100 million and it could be worth much more than that depending on the valuation of his name and likeness rights.

What is clear, as the Daily Signal points out in "Why Over Half of Prince's Estate Will Go to the Government," is that combined federal and state estate taxes will take over 50% of the estate's assets.

Prince's estate will have to pay the top federal estate tax rate of 40% as well as the Minnesota estate tax of 16%. The other costly consequence of not having an estate plan is that it will lead to numerous claims against the estate. Thus, beyond the amount of taxes the government will take, substantial money will also be lost to fees dealing with those claims.

Millions of people have been inspired by the entertainer but they should not be inspired to follow in his footsteps and fail to implement estate plans of their own. If Prince had an estate plan, then it is possible the estate tax burden could have been lowered. It is also likely that many claims against his estate would have been less likely to appear.

Reference: Daily Signal (April 29, 2016) "Why Over Half of Prince's Estate Will Go to the Government"

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