Global Head of Cross Border Wealth Planning
May 13, 2016
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Prince’s untimely demise has highlighted the importance of estate-planning for wealthy individuals
The consequences of not having an estate plan have been well illustrated in press coverage of Prince’s death. As usual when a celebrity dies, the press were quick to research and reveal the extent of Prince’s wealth and who will inherit it. An implemented estate plan could have prevented these details from becoming public.
Experts interviewed in the press have estimated Prince’s taxable estate at $250 million, most of which is believed to be primarily copyrights, not cash. If true, between federal and state estate taxes, at least $120 million will likely be due to the tax authorities within 9 months of his death. This is unfortunate given that proper estate planning may have significantly mitigated these taxes. In addition, if there is not sufficient liquidity to pay the estate taxes, assets will need to be sold, perhaps in a fire sale, to meet this liability.
Much has been made of the fact that Prince apparently had no Will and died intestate. If true, it means that the disposition of the assets Prince acquired over the course of a lifetime will be decided by the courts applying intestacy law rather than by Prince. These laws are often not consistent with what an individual may have wanted. In addition, the lack of clarity regarding Prince’s intentions for his estate has led to speculation that lawsuits will follow, from family and alleged claimants. One of the greatest benefits of an estate plan is that you control who receives what, how, and when. With your intentions for your assets clearly defined, the potential for family conflict is greatly reduced.
Wealth planning can provide essential protection for family and assets. Since life is unpredictable, the best time to plan is now.