Lessons to be Learned from Celebrity Estate Planning Miscues
The recent death of Minnesota music legend Prince Rogers Nelson, known to the world simply as Prince, brings to the forefront the importance of proper estate planning to ensure that you ultimately control the disposition of your estate.
On Tuesday of this week, Prince’s sister, Tyka Nelson, commenced a probate proceeding by filing a petition for the appointment of a special administrator for Prince’s estate. In the petition, Ms. Nelson states that she does not know of the existence of a will and has no reason to believe that Prince executed any other testamentary documents. The petition names Ms. Nelson and five surviving half-siblings as interested parties and potential heirs.
While new information is being released on a daily basis, this very public situation can serve as a lesson for not just celebrities and wealthy individuals, but for anyone who has been watching the aftermath as news sources guess as to the size of the estate, calculate potential estate taxes owed, and anticipate the potential for family conflict and estate litigation.
At this time, the size and scope of the estate is unknown, but based on available information, it appears that there are numerous assets that will need to be collected and inventoried. It is very likely that Prince’s heirs will pay a significant amount in legal and administrative fees before his estate is settled. An additional consideration will be the payment of estate taxes at both a state level and a federal level. In circumstances like this, it is not unusual for the estate administrators to disagree with the IRS or the Minnesota Department of Revenue over the actual value of the estate, and thus what taxes will ultimately be due.
The biggest surprise as it relates to the estate is that there appears to be no estate planning in place. According to the recently filed petition, it appears that Prince had no will or estate plan. This means that it is likely that most of his assets will be subject to a probate proceeding. Probate is the process of transferring a deceased person’s “probate property” using the court system. Probate includes, but is not limited to, assets held in the decedent’s name alone (without designation to whom the property should pass upon death) and assets held with others as “tenants in common.”
When someone dies without a will in Minnesota, their estate is called an “intestate estate.” With an intestate estate, the state intestate succession laws apply to all probate property. What this means is that instead of being able to designate who you would like to receive your assets, the state of Minnesota mandates a specific formula. Aside from certain nuances related to blended families and step-children, the Minnesota intestate succession laws provide that an intestate estate will typically pass in the following order: (1) to the decedent’s spouse, (2) if there is no surviving spouse, to the decedent’s descendants, (3) if there is no surviving spouse or descendant, to the decedent’s parents, (4) if there is no surviving spouse, descendant or parent, then to the descendants of the decedent’s parents.
In the case of Prince’s estate, it has been reported that Prince had one biological sister, and six half-siblings, including one who passed away previously without leaving any descendants. Under Minnesota law, half-siblings are treated in the same manner as siblings, so it appears that Prince’s five surviving half-siblings will have the same claim to his estate as his sole surviving sister. This means that it is possible that Prince’s estate will be split six ways between his sister and half-siblings.
What gets lost in this whole situation is the most important facet of estate planning. By failing to implement an estate plan, the surviving heirs and beneficiaries have no way of ascertaining the decedent’s intent and what he would have wanted done with his assets.
The key lesson from the publicity generated by Prince’s death is that regardless of the size of your estate, planning ahead can reduce administrative expenses, provide clear instruction as to your wishes, and decrease the potential for family conflict. Regardless of the size of your estate, everybody has an interest in saving money and avoiding conflict.
Matt Jensen is an attorney in FMJ’s Trusts & Estates group, offering complimentary 30-minute initial consultations and flat-fee estate planning to fit every budget. He can be reached at firstname.lastname@example.org or 952.995.9500.