Music Legend's Bad Example

prince's bad estate planning example problem

Local estate-planning attorney Kyle Krasa has an informative blog.  Here is a condensed recent post I know you will enjoy:

“After music legend Prince died last month, it was revealed that he did not have an estate plan.  The repercussions from his decision to neglect his estate planning are starting to become clear.  His estate will have to be administered through the Minnesota probate court.  His estate will be divided among his “intestate heirs,” those individuals who are most closely related to him by blood as determined by Minnesota statute.  This may or may not be what Prince would have wanted if he had chosen to take control of his estate plan.  Furthermore, although Prince did not have any surviving children that he publicly acknowledged, reports have indicated that at least one person claims to be his son and therefore entitled to the entire $300 million fortune.  The probate court will have to sort out this situation which will involve excessive time and expense.

Although fellow musician Amy Winehouse was divorced at the time of her death, her friends indicate that she still had strong feelings for her ex-husband, that they were “soulmates,” and that she would have wanted him to inherit from her.  However, because she did not leave a will or trust, he was not included as an heir of her estate.

Country singer John Denver failed to name a beneficiary on his pension plan.  As a result, upon his death, his retirement plans were required to be cashed out within a short period of time which accelerated substantial tax unnecessarily.

Rock and roll legend Elvis Presley had 73% of his estate eaten up in taxes due to poor tax planning.  His heirs were forced to sell many of his memorabilia in order to create liquidity to pay the taxes which were due to the IRS soon after his death.

Cordozar Calvin Broadus, Jr., otherwise known as “Snoop Dog,” had some colorful comments when asked whether he had an estate plan in place in the wake of Prince’s death.  To paraphrase in a more genteel manner, Snoop Dog said that it was of no concern to him as to what happens to his money after he dies.  He went on to say that he hopes to be reincarnated.  “Hopefully, I’m a butterfly.  I come back and fly around and look at all these [fools] fighting over my money.”

Snoop Dog is at least 50% correct: if he does not leave a comprehensive estate plan, there will be people fighting over his estate.  As to whether he will be able to come back as a butterfly to observe the turmoil from above, that is unknowable.  In any event, I have never written a “reincarnate-me-as-a-butterfly” clause into an estate planning instrument and that certainly would not be an effective, legally-binding instruction.  

The choice is clear.  If you don’t care whether you leave a mess for your loved ones upon your death and you plan to gleefully observe the chaos from above through metempsychosis, then you probably do not need to establish an estate plan.  However, if you want to take charge of your estate to ensure that everything you have will be distributed to everyone you love in the most efficient manner possible, you should make an appointment to consult a competent attorney to help you avoid problems.”  

 

Kenneth B. Petersen CFP®, EA, MBA, AIFA® is an investment advisor and Principal of Monterey Private Wealth, Inc., a Wealth Management Firm in Monterey.   He welcomes questions that you may have concerning investing, taxes, retirement, or estate planning.  Send your questions to: Ken Petersen, 2340 Garden Road Suite 202, Monterey, CA93940 or email them to ken@montereypw.com.