When rock superstar Prince died of a fentanyl overdose in 2016, he left behind valuable assets. He also left behind a long list of relatives but he had no will. In addition to his tangible assets, such as money in the bank and real property, Prince left music rights and the value inherent in his name and likeness. Comerica, the estate’s administrator valued it all at $82.3 million, but the IRS said it was worth twice that amount – $163.2 million – and asserted a tax claim for $39 million.
Kiplinger’s recent article entitled “Prince’s Estate Is a Royal Mess: 5 Ways You Can Do Better” said that it took six years and tens of millions of dollars in legal fees, but the heirs and the IRS finally came to an agreement in January. They agreed to a final valuation of $156.4 million. However, since his death, Prince’s half-brother passed away in 2019, leaving a will that opened the door for new, unrelated parties to assert claims against the estate. The process of distributing the vast estate will now finally start.
Although we may not have a fraction of Prince’s estate, we can all treat our heirs like royalty! There are a number of simple steps you can take now to prevent a nightmare like this one. Let’s look at five key lessons from the Prince estate mess.
Protect your family by enlisting the services of an expert to value jewelry, artwork, and other items of unique value. You should also make certain to keep all your documentation in a safe place. Although valuations change over time, you should have a pretty good idea of an asset’s value when making estate plans. This can spare your heirs severe tax consequences down the road.
Reference: Kiplinger (Feb. 5, 2022) “Prince’s Estate Is a Royal Mess: 5 Ways You Can Do Better”
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