On behalf of Bebout, Potere, Cox & Bennion, P.C. posted in estate planning on Monday, January 23, 2017.
For readers of this blog, recommending a will may be akin to preaching to the choir. Yet a surprising number of Americans fail to heed this advice, including the late singer Prince.
Since Prince did not leave a will, the probate process had to be applied to his estate. The laws of intestacy also determine the heirs that will inherit his assets. In this case, Prince’s surviving six sibling are first in line.
Unfortunately, the probate process and lack of an estate plan also means that nearly half of Prince’s roughly $200 million estate will go to federal and state taxes. According to some commentators, even minimal planning with trusts could have sheltered the majority of Prince’s estate from taxes.
Without an estate plan, the probate process also requires valuation of the estate assets. That poses another problem, as Prince’s music catalog and unpublished songs in his vault can be difficult to value. By comparison, the process began in 2009 for the estate of Michael Jackson, and the case is only now scheduled for trial.
More to the point, the IRS must also agree with the administrator of Prince’s estate on that valuation. Presumably, those parties have competing interests. A lower valuation results in less estate tax liability, whereas the IRS stands to collect more taxes from higher valued estate assets.
Regardless of the size of an estate, today’s story should remind us that estate planning is really about preserving one’s values and preferences. A will and various trusts can help individuals plan for the future of their loved ones. Our Michigan estate planning law firm can help you accomplish those goals.