On Tuesday, Prince’s sister Tyka Nelson filed a bunch of papers at the Minnesota probate court that indicated Prince died without executing a will. This is having expensive consequences.
Forbes estimates that Prince’s estate is probably worth almost $300 million. In addition to his actual property, there is his intellectual property, including what reportedly amounts to a vault of unreleased songs. How do you decide what something so priceless is worth, and who it rightfully belongs to?
Even if you could, the biggest problem is that without any estate planning or directives in place, everything now falls under the jurisdiction of Minnesota, who will appoint a special administrator to value everything and decide who will receive what assets. Then come the taxes.Forbes spoke with expert Martin Neumann, who summed up the“cha-ching” noises coming from the statehouse:
“The IRS is going to be a partner with the estate for a long time to come to the tune of 40 cents on the dollar,” explains Martin Neumann, a partner at Weinstock Manion with expertise in probate and estate planning. With a maximum federal tax bill of 40% and a maximum state tax of 16%, the taxes temper out to a 50% tax bill. For an estate worth a reported $300 million by current estimates, it could be paying up to $150 million in taxes. “So part of what will be handled is an agreement with the taxing authority with how the estate taxes are paid and over what period of time,” Neumann explains.
Another problem facing Prince’s heirs is that Minnesota has a common law, but not a statutory right of publicity. There’s been no court case in the state establishing whether or not his work will go to them via descendibility, so they could hypothetically make money with post-mortem licensing deals in future. Prince would probably hate those sorts of deals anyway, but this still doesn’t seem like a situation he planned.
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