For this week’s blog post, I wanted to expand on the Forbes article that we posted yesterday on Facebook. Sadly, in 2016 we lost many famous folks who were very talented and vibrant in their craft. Of those, Prince has stood out the most for having not made an estate plan of any kind available to his potential heirs.
According to the articles posted this week, Prince’s Estate lost more than $112 million through the standard probate process. Not only is this a staggering loss of cash, but the probate court decided to split the estate equally among six heirs. One can only assume – but never know for sure – that this may have been Prince’s intention had he made provisions.
The article goes on to explain that Prince had other options to stave off this gigantic tax bill, had he prepared:
- He could have reduced the value of his assets subject to taxes before he died.
- He could also have taken advantage of the gift and estate tax deductions, which would have helped reduce his estate on a dollar for dollar basis for the value of gifts transferred to charities.
- He could have also given funds at death to charity, through straight donations, or using a charitable remainder trust.
- He could have followed in Michael Jackson’s footsteps and used a Grantor Retained Annuity Trust, which would “retain an income stream for a fixed period of time, with the remainder of the trust’s assets passing free of gift and estate taxes to his intended beneficiaries.”
And that is just the start. There are many tools at our disposal to keep someone from losing funds in probate and we will begin a series on this subject here on our blog in the coming weeks. It is an example to us all of the value of planning ahead.