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Late musician Prince's estate suffering of no trust

Residents of Moorestown may remember the late music legand Prince for his Grammy award-winning songs. However, Prince's estate is suffering a significant loss due to his lack of estate planning. The rockstar's estate is going through the probate process, and it must pay estate taxes to the tune of approximately $100,000, accounting for about half of Prince's $200 million estate.

Unfortunately, it seems that Prince did not leave a will, meaning his property was not shielded from federal and estate tax laws. The federal tax rate his estate is subject to is 40 percent, and the state tax rate in Minnesota where he lived is 16 percent. While there are still deductions and exclusions, the total taxe rate his estate will be subject to is about 50 percent.

But, due to its size, Prince's estate can make tax payments over a period of time. And, this is good, as Prince's assets were not particularly liquid. According to one inventory, he had no stocks or bonds. He did have approximately $830,000 in gold and $110,000 in cash, along with real estate amounting to approximately $25.4 million. His entertainment assets are still undergoing the valuation process.

One thing Prince could have done while living to avoid this outcome was to create a trust. Therefore, his assets could go to loved ones or charities, meaning there would be little left subject to taxes. Ultimately, without a will or trust in place, Prince's six siblings will inherit what remains of his estate.

One does not need to be a wealthy superstar to benefit from an estate plan. Most people do not want the government to take a sizable chunk of their estate after they die. By taking some simple estate planning steps, a person can preserve his or her assets to pass on to their loved ones, rather than the government.

Source: Pioneer Press, "Poor planning means government will take half of Prince's estate," Steve Karnowski, Jan. 17, 2017

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