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Prince's estate reveals the cost of not leaving a will

Music fans in New York and across the country were saddened in April 2016 when Prince passed away at the age of 57. Stories about the estate planning mistakes of celebrities who die young are not uncommon, and media reports indicate that Prince's heirs will inherit only about $88 million of the iconic performer's $200 million estate. Prince died without any type of estate plan whatsoever, and among other things this means that state and federal estate taxes will swallow up most of his assets.

Failing to put even a rudimentary estate plan into place can have consequences that go beyond paying additional taxes. Prince's six siblings will likely split what is left of the performer's estate equally, but that may not have been what he would have wanted. While estate plans may be financial management tools, they also give people a great deal of control over how and when their assets will be divided. This can prevent heirs being drawn into protracted legal battles during a time of overwhelming grief.

When artists like Prince die, their work often increases in value. Placing these assets in a grantor retained annuity trust allows artists to earn income from their work while they are alive and protects their heirs from taxes and the public scrutiny of probate after they pass away. Prince also could have avoided estate taxes by transferring some of his assets to corporations or LLCs and then placing non-controlling interests in these entities into trusts for his heirs.

Experienced estate planning attorneys may understand that individuals often put off discussing their end-of-life arrangements, but they could also point out that avoiding these issues can cause stress and unhappiness that grows over time. Attorneys could explain that even a straightforward estate plan can see to the needs of loved ones, make disputes less likely and create peace of mind.

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