Very few Pennsylvania residents will have escaped media coverage of the passing of one of America’s great performers. When Prince died recently, his family was thrown into the chaos of having to sort through his affairs, as is the case for so many families who experience a sudden loss. It appears that the musician did not have an estate planning package in place, as one of his siblings has asked the court to assign a special administrator to begin working on the process of sorting out Prince’s estate.
Prince was known around the world for his music and showmanship, and his work has stood the test of time admirably. He is also famous for his vehement assertion that artists must take care to maintain control over their own body of work. He fought bitterly with his record label to wrest control over his music, and he advised younger musicians to do the same. However, it seems as if Prince failed to protect his work from loss after his death.
If Prince did not create a will or other estate planning documents, as suggested by one of his siblings, his estate will be handled according to the laws of his state of residence. As Prince was unmarried and had no children, his fortune is likely to be divided among his six surviving siblings and half-siblings. However, there is another aspect of his estate that could cause contention.
The Internal Revenue Service has an interest in how Prince’s estate is handled. When an individual amasses wealth beyond a certain threshold, estate taxes are levied. Those taxes can reach as high as 40 percent of the value of an estate, in addition to state estate taxes. That could end up taking a huge chunk of the wealth that would have been handed down to Prince’s surviving family members, and instead turn it over to the government.
As the case moves forward, Prince fans in Pennsylvania and elsewhere may learn more about the performer and his wealth. If the estate administration and the IRS are unable to come to terms on the value of the estate and the proper level of estate tax due, the matter could be tied up in court for many years to come. That outcome is likely to be a far departure from the artist’s intention and could have been mitigated with proper estate planning.
Source: CNBC, “Prince’s apparent lack of planning may cost his estate“, Kelley Holland, April 26, 2016