Prince died unexpectedly in Minnesota on April 21st and the cause of his death is still a mystery. There are reports that Prince died from AIDS, from an overdose on cocaine or from Percocet, from influenza, or from other causes. None have yet been confirmed.
His death leaves behind an immediate estate worth $300MM. He also leaves behind his publishing rights and master recordings. His manager, Owen Husney, estimates these assets alone to be worth $500MM. One would assume that with an estate this large that Prince would’ve put together an estate plan, especially if the estate is worth ~$800MM. However, his sister Tyka Nelson has recently stated that he did not leave behind a Will or any other testamentary documents. As such, Tyka has filed papers petitioning for a special administrator to oversee her brother’s estate and said that immediate action is needed to run Prince’s business affairs. She asked that Bremer Trust be named administrator during the interim. Prince is known to have taken direct control over his own image, name, likeness, and his recordings, so the revelation that a will was not drafted is shocking.
Without an estate plan, a complicated case like this will surely last years in court. Prince was twice divorced with no children and his parents preceded him in death. Prince has one sister, Tyka, and had 7 half siblings. However, two of his half-siblings have passed, leaving the other 5 as possible heirs. Under Minnesota law, half siblings are considered as full siblings. This means that his estate could be split 6 ways (the 5 half siblings plus Tyka). If it were as easy as this, each sibling would receive ~$133MM in assets ($800MM/6). However, we don’t know if there are any debts unpaid, if these assets can be evenly split, if there are other possible heirs, what the legal costs will be, or if the publishing rights and master recordings really are worth $500MM. Further, since Prince’s death on April 21st, more than 2.3 million songs and over half a million albums have been sold, increasing the estate’s value.
All of this could have been avoided if Prince would’ve drafted an estate plan. Not having a will means that the state will determine how Prince’s assets will be divvied up. Not having a trust means that the this will not be a private manner. All of these court documents and proceedings will be open to the public. While there is no perfect time to draft a plan, it is always better to have one created sooner rather than later. As Prince’s passing has pointed out, both life and death can be unexpected.
When To Draft An Estate Plan
Usually the best time to put together an estate plan is when there is a big life event (e.g. marriage, buying a home, having children, etc.). If you are young and if you a small asset base, then you might not be compelled to draft a will or to create a trust. Though, if you are married with children and if you are starting to accumulate wealth, you should seriously consider it.
As a financial professional, I have come across many individuals with a sizable estate that have yet to put together an estate plan. Unfortunately, I have also worked with clients that have inherited assets that have gone through probate. It is a terrible, lengthy, and costly experience that often leaves the heirs unhappy. My primary job is to not only manage my clients wealth, but to also help them protect it. When I meet with my clients during a financial plan fact-finding session, I always ask if they have a will and/or a trust. I also ask when it was last updated. Having an estate plan is great, only if it is relevant. If you have been divorced or if you have had any children since the plan was established, it is time to update. A best practice is to update the plan every 3-5 years.
You should always consult an estate attorney when creating an estate plan. It may cost you a few thousand dollars, but it is a lot better than having nothing at all. LegalZoom and other online services are great at creating a “boiler-plate” wills and trusts, but they often fail to account for specific situations and they do not fully encapsulate your financial and family situation. Good estate attorneys are well worth the cost.