Tag Archives: estate plan

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Photo of the musician Prince on a purple motorcycle

Bequeathing Trouble: Prince’s Estate Plan

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Prince’s death came as an enormous shock to the world. And the $150 million in estate taxes that his family will end up paying will come as a shock to them. It turns out that Prince’s estate plan was to not have a plan.

The untimely death of the enigmatic music icon left two things:

  1. Millions of grieving fans
  2. A vault of unreleased recordings

But just what’s going to happen to those recordings—a collection reportedly large enough to release new music for the next 50 years—and the 57-year-old pop star’s $300 million in assets, is still very unclear.

Why?—because Prince died without setting up an estate.

The absence of an estate plan is surprising for an artist known for his meticulous attention to detail, but in reality it is an all too common occurrence for the wealthy.

  • “It’s too expensive”
  • “It’s too much trouble”
  • “I’m not planning to die”

These are ALL lines I’ve heard over the course of my career, and they’re all equally frustrating to hear. I really shake my head at the “It’s too expensive” excuse. Consider Prince’s example. If his estate is worth $300 million, as reported by CNBC, then his family will pay half of that in taxes. Compared to $150 million, spending $50,000 in estate planning sounds pretty cheap to me.

You see, whether Prince wasn’t ready to think about his own mortality, or he simply forgot to form an estate doesn’t matter. What DOES matter is that his heirs are now going to be mired in paperwork with government.

By failing to form an estate plan (or even a will), Prince died intestate, which means no instructions were left. No instructions mean the government has to fill in the blanks. A court will appoint an executor for the estate, and after debts, taxes, and probate costs, will divide what’s left according to the laws of intestate succession.

Prince completely surrendered his right to control what happens to his worldly possessions—music, money, property, clothing, jewelry, etc.—by not taking the time to form an estate plan.

Worse still, he’s pass along the financial, emotional, and legal burden of settling the estate to his family.

In my experience, when a high-value individual dies intestate, lengthy in-family legal battles over rights, custody, or the valuation of assets, are not far off.

In the case of Prince, the deceased artist’s sister and half-brother have very different ideas about what should happen to his unreleased recordings, and those different ideas will—at some point—lead to a legal confrontation.

Prince’s legacy—his legend, his unpublished songs, his wealth, his property, his famous outfits, everything—will be controlled by people he has never even sat down and had a conversation with.

The executors of Prince’s estate literally don’t know him any better than you or I do—we can only hope they’ll make decisions he would approve of.


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Problems with Universal Life Insurance Policies

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Here is a recent article in the Wall Street Journal that discusses the increasing costs of Universal Life Insurance:  Stung by ‘Universal Life’  This is one of the myriad of issues that can affect people in their estate planning. This is why it is essential that you review your estate plan with your attorney at least every five years (at a minimum).

This is also one of the problems with the commission-based financial services industry. Real people rely on the “advise” of salespeople who are more focused on getting paid the next commission rather than actually providing necessary and useful information. This is especially sad when it affect older people.

This is yet another reason that it is crucial for all of the advisors to work together (and for clients to insist on this). This keeps the various advisors honest.


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What are the Duties of a Personal Representative?

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What are the Duties of a Personal RepresentativeA good estate plan covers key life decisions such as what happens to your home and other assets if you die. It also addresses who will care for your children and financial assets if you pass away. Your personal representative will be the one to make the necessary decisions to carry out your wishes.

The role of personal representative is a big responsibility. Settling the estate of a deceased person requires attention to detail. It’s important to select someone who is qualified for this position regardless of your net worth.

Specific duties and responsibilities can vary slightly from state to state. I practice in Arizona, but in this two-part overview, you’ll be able to get a sense of the duties of a personal representative, regardless of where you live in the United States.

  1. Act as personal representative. Perform fiduciary duty of fairness and impartiality to the beneficiaries and to the creditors, to be cautious and prudent in dealing with the state assets.
  2. Gather, control and manage estate assets. This is not moving into the deceased parent’s house and taking over assets for personal use. The personal representative oversees the execution of the will and makes sure that the assets are distributed according to the will.
  3. Provide notice of the appointment. You will need to notify your state’s revenue department and all of the heirs and devisees that you have been appointed. These heirs and devisees have four months to contest the probate.
  4. Provide notice of the admission of the will to probate. This is a form that gets filed with the court and delivered to those involved in the estate. It explains the duties and responsibilities of a personal representative.
  5. Mail copies of the order to the personal representative. You must mail copies of the order to the personal representative to the heirs and devisees.
  6. File proof of compliance. A notarized statement must be filed with the court affirming that the order to the personal representative was sent out.
  7. Publish notice to creditors with the court. You will need to notify creditors that they have a certain period of time to file a claim and give them instructions on how to file and pursue being paid.
  8. Protect assets. It is your responsibility to secure and keep valuables safe.
  9. Determine whether there are any statutory allowances. Statutory allowances can include a homestead allowance, exempt property allowance and a family allowance.

We will continue with this list in our next post. This is an important part of estate-planning. It doesn’t have to be complicated, but it does help if you have a sense of what the roles and responsibilities of a personal representative are.

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