Disputes among potential beneficiaries are a common source of estate litigation. However, the troubles facing the estate of the late singer Prince also reveal another troublesome area: asset valuation.
Since the late singer apparently passed without leaving a will behind, the probate process requires that all assets in his estate be valued. That process is more straightforward for items like Prince’s real estate. However, Prince also left behind a substantial music catalog, including unpublished songs in his Paisley Park vault.
Putting a price on art can seem like a subjective process. On top of that, the IRS must also agree with any valuations proposed by Prince’s estate. The IRS and the estate have competing interests, as higher valued assets will be subject to more estate tax.
As it currently stands, the lack of any will or trusts means that nearly half of Prince’s estimated $200 million estate will go to federal and state taxes. The remainder will go to Prince’s surviving six siblings, pursuant to the laws of intestacy.
In New York, especially, it is important for individuals to have a strategy for transferring their assets after their passing. This is because New York provides an opportunity for creditors or other interested parties to asset a claim in an estate before the assets pass to heirs.
Of course, removing assets from the estate by transferring them to a trust may be a way to circumvent this process. Our estate planning law firm can help you set up an estate plan that will suit your needs. If disputes arise, we can also fight to protect your interests in any estate litigation.
Source: Pioneer Press, “Poor planning means government will take half of Prince’s estate,” Steve Karnowski, Jan. 17, 2017