Prince The Idiot Savant
The Prince is Dead. Long live . . . ?
Prince is dead. He died on April 21, 2016, at age 57. He had no children and no Will.
Musically, Prince was a genius. Whether or not you enjoy his art, he was brilliant. A steady stream of creative energy and amazing music flowed out of him. He rivals and perhaps surpasses the musical prodigies of the ages. He truly had the exceptional skill and ability of a savant.
Sadly, at the same time, he was an idiot. He thought he would live forever. He refused to entertain any discussion of planning for the future, particularly his death. That was simply stupid. As a consequence, he died intestate. In other words, he died without any kind of Last Will or other instrument directing what is to happen with his estate. So now what?
If you don’t have a plan for what will happen with your estate, the politicians have one for you. Their plan will have goals that are very different from what you want. The goal of politicians is to maximize government revenue or taxes and to stay in power. They will use your estate to get what they want if you let them.
Prince Pays the Politicians
First, in the U.S., without a Trust, the disposition of an estate must be resolved by going to court. That means a form of litigation called “probate” in the U.S. legal system. A probate will be necessary for every state where Prince owned property. Second, by law, there is a priory in which the assets of his estate are paid out. The lawyers who get involved in the probate will get paid before any family member receives any part of the estate. But there is one “partner” in Prince’s estate that will get paid even before the lawyers: the politicians.
Not surprisingly, the government gets the first and biggest piece of the estate. In this instance, there will be two governments that take a percentage of Prince’s estate: the federal government and the state of Minnesota where Prince lived at the time of his death. After an exemption of $5.45 million, the IRS will collect 40% of Prince’s estate. After an exclusion of $1.6 million, the state of Minnesota will get 16%. There are some offsets between the two.
Estimates of the value of his estate range from $300 million to $900 million. Do the math. More than half of Prince’s wealth will go to the politicians. Does anyone believe that is what Prince would have wanted?
Lawmakers from both parties in Minnesota have contemplated lowering the state’s estate tax rates. Such future action will not help Prince’s estate. On the federal level, some prominent politicians and presidential candidates of proposed lowering the exempt amount to $3.5 million and raising the maximum federal rate to 65%. Although it is supposedly “permanent,” the current federal law is still in play. As Mark Twain is reported to have said, “No man’s life, liberty, or property are safe while the legislature is in session.”
All of these taxes were optional and could have been avoided.
Family Leftovers
After the politicians grab their piece, and after the lawyers get paid for litigating the estate, the remainder will be divided up among Prince’s family based on rules of intestate succession. An estimated 700 people have claimed to be his sibling entitled to a share. The lawyers have hired a professional gene testing and heir finding genealogical service to help sort it out. Only five or six so-called siblings are likely to prevail. Of course, the attorneys will get paid for working out the claims. The family will divide up whatever is left after the tax collectors and the lawyers take the biggest share.
All this happens under the bright lights of public proceedings in the court. The instant papers were filed, they were published on-line. Prince was notoriously private. Now his most expensive problems are going to be worked out in a conspicuously public forum.
For Prince, it’s “party over, oops out of time.” If you’re reading this, you still have time. Resist the delusion of immortality. Wealth does not make you a superhero immune from the human condition. You can be more of a genius than Prince if you just take charge of your own life and plan your estate. Death is certain, but some taxes are voluntary.
Be the Genius!
I can’t write music like Prince. But I could have helped him avoid paying hundreds of millions of dollars in optional taxes and legal fees. That would have been more profitable for Prince than another lifetime of hit records. Your plan or the politician’s plan – it is your choice. Call or email. Learn how you can be smarter than Prince.
Image Source: https://flic.kr/p/G55xub