PRINCE DIED WITHOUT A WILL WHY YOU SHOULDNT
Prince passing away without a will brought national attention to the stress and the questions that revolve around a star dying without a will. Well, let me tell you from close personal experience, you don't have to be rich or a star to see the stress families and friends go through when a loved-one dies without a will. I have seen it personally by working for, and getting to know, families of estate properties that I sell or get asked about selling. The one common theme is the high stress and the wish that they just knew what the passed family member wanted done with everything. It is hard enough to clean up and clean out homes, boxes, storage units, etc., but to not have any idea what the owner really wanted done with it all, and who should get what, leaves the families and friends in turmoil. So with all of this in the news I asked my good friend, Peggy Sherman, who happens to be a lawyer, to write a little something I could share on my real estate web site. Below you will find her very helpful and informative blog. - Lisa Handley, ReMax Advantage Plus - Licensed Sales Agent in the State of Minnesota.
PRINCE DIED WITHOUT A WILL
WHY YOU SHOULDN’T
Prince Rogers Nelson, better known to the world as Prince, died on April 21, 2016 at his home in Paisley Park. It appears that the pop star may have died without a will, leaving behind a multi-million dollar estate. Prince was survived by one full sister and five half-siblings, but Prince’s family will not be his biggest heirs.
Both the IRS and Minnesota Revenue will impose estate taxes on Prince’s estate, which will take more than half of his estate. The IRS’s top estate tax rate is 40%, which will be assessed after the first $5.45 million, which will escape the federal death tax. The State of Minnesota’s top estate tax rate is 16%, which will be assessed after the first $1.6 million escapes the state death tax.
While, with a fortune as large as his, Prince would have been unable to avoid estate taxes altogether, with tax planning, he would have been able to reduce the government’s claim to his estate.
Now for just a little terminology. When a person dies without a will they are said to have died “intestate.” “Decedent” is the legal term for the deceased person. A “testamentary document” is a will, a trust, or a combination of a will and a trust, and that document gives instructions regarding who will administer your estate, who will receive what, and in some circumstances, when, and under what conditions the beneficiaries will take.
When a person dies intestate things get complicated. And complicated things get time consuming and expensive. A personal representative must be appointed. In Prince’s estate, his sister, Tyka Nelson, has asked the court for the appointment of special administrator to manage her brother’s estate. Part of the administrator’s job is to figure out who the heirs are under the laws of intestacy. The estate must be inventoried and appraised. Prince had physical assets, cash, investments, real estate, future royalties, and more, which are estimated to be between $300 and $500 million.
Under Minnesota intestacy law, if there is no surviving spouse, the estate passes to the decedent’s descendants. Those are your children, grandchildren and so on. If there are no descendants, the estate passes to the parents of the decedent. If there are no living parents, the estate passes to the decedent’s parent’s descendants, meaning the decedent’s siblings and half siblings. In Prince’s case, it is well within the realm of possibilities that previously unknown children will pop up. If any such children can prove that they are in fact Prince’s children, they will jump to the head of the line and inherit everything.
Consider the possibility that an unknown child of Prince is a minor. If you don’t have a will or trust and your assets are left to minor children or grandchildren, the inheritance will be held in a custodial account while they are minors. Once they reach the age of 18, they are entitled to receive the entire amount with no conditions. Giving millions of dollars to an 18 year old is seldom a good idea.
Prince was very philanthropic during his lifetime, and doubtless his favorite charity was not the government. Unfortunately, because Prince didn’t have an estate plan, any charitable intentions he may have had for his fortune will not materialize.
So what does this have to do with you? Chances are you’re not a millionaire, and your estate may not be subject to any estate tax. Well, we don’t need millions of dollars to need a will or other estate planning. In the absence of an estate plan, you could be passing along a complicated mess to your family.
If you have minor children, rather than you choosing who will be the guardian(s) of your children, the Court will do that for you. And remember, once your children turn 18, they will have unfettered access to any inheritance that they may have coming. Or, if you have special needs child, an inheritance will likely disqualify them from their government benefits. This means that they will have to spend all of their inheritance, and then re-apply for benefits.
Suppose you would like to disinherit someone, or at least limit their inheritance. Say you have a grown child with a drinking, drug or gambling problem. Or perhaps, charming as they may be, they simply cannot handle money. Sadly, in most such cases, the inheritance they receive -- that is, the money you worked so hard for all your life -- is gone within months, with nothing to show for it.
If you want anyone outside your family to inherit, you need an estate plan. This could be a good friend, your significant other, or a charity. If you own a business and you have no exit strategy, your business interests fall to your intestate heirs, who may or may not have any knowledge or skill in your trade or business. You can’t plan to reduce or eliminate estate taxes or income taxes.
Simply put: without an estate plan you typically have no control over your own assets at death.
For advice on how to create a comprehensive estate plan, please contact the law firm of Sherman Law, P.A. at (952) 423-1645. We have been serving our clients in estate planning and administration for fifteen years.
Written by Peggy Sherman - of Sherman Law, P.A.
Author: Lisa Handley
May 3rd 2016
About Lisa: TEAM LEADER & Sales Manager for TC Specialists is LISA HANDLEY - 612-390-6520. Lisa is a native of M...