Prince’s Estate

There has been a lot written since Prince passed about the fact that he had not done estate
Planning.  Much of what has been written is to the effect that had he done an estate plan it would be a lot easier to distribute his estate.  That may or may not be correct.
 
When one dies and does not leave a will or a trust, he is said to have died “intestate” and the laws of intestacy of his state of residence control the distribution of his estate.  Each state has its own law of intestacy.  In most states if you are a single person, without children, your estate would go to your parent(s).  Since neither of Prince’s parents are alive, the default is to his siblings.  For most people that is straightforward, but Prince has a number of half siblings and at least one of them has predeceased him.  Most states provide that if a sibling predeceases you, that siblings share goes to his child or children.  Still not all that difficult.
 
What is complicating the situation at the moment, is that while Prince did not have any known living children, there are people who contend that Prince is their biological father.  DNA testing is going to be utilized to assist the Carver County District Judge in making his determination as to whether Prince did or did not leave a child or children.  Under the law of most states that child or those children would jump to the very front of the line and inherit his estate.
 
Even with a trust and a will, individuals could certainly have contended that they were fathered by Prince and the same process would have occurred.  The failure of Prince to have engaged in estate planning will undoubtedly result in less money going to his heirs because Uncle Sam and the state of Minnesota will receive more money than they would have if he had engaged in comprehensive estate tax planning.
 
In California individuals with a net worth greater than $5,450,000 have estates that are subject to estate tax. Unlike Minnesota, California does not impose a state “death tax”.  Minnesota’s state estate tax is 16% and is imposed on estates with a value greater than $1,600,000.  So ultimately, Prince’s estate which has been publicly estimated to be valued between $300,000,000 and $500,000,000 will pay over 50% of its worth in taxes.
 
Most people would say that it would have been worth a couple of visits to the estate planning attorney to save $150 to $250 million.  His heirs, whomever, they turn out to be will receive a lot of money, but they could have almost double had Prince engaged in comprehensive estate planning.