Prince Rogers Nelson (a.k.a. “Prince”; a.k.a. “an unpronounceable symbol I couldn’t find on the version of Microsoft Word that I used to write this article”) died suddenly and unexpectedly on April 21, 2016. Since that time, his legions of fans and admirers have flooded the Internet with millions of tributes and expressions of grief and gratitude. Heck, I’ve even found myself seeking out “When Doves Cry” and “Let’s Go Crazy” on Spotify.
Also flooded since Prince’s death has been the courthouse in Carver County, Minnesota – with Probate filings related to his estate. Why? Because his net worth is estimated to have been somewhere in the very exclusive neighborhood of THREE HUNDRED MILLION DOLLARS, and artist formerly known as “Prince” had no known will or trust at the time of his death. Hence…Welcome to Court!!
Because Prince left no will or trust, the probate laws of the State of Minnesota will decide who inherits his massive estate, and in what percentages. Prince left no surviving spouse or living children, and his parents and grandparents are all deceased. In the absence of any such relations, Minnesota law requires that his estate be split equally among his parents’ other children. This means that Prince’s one full sibling and five surviving half-siblings are all out at the courthouse (with their attorneys in tow) making sure to claim and protect their windfall.
But they’re not the only ones. A Probate action gives other people an opportunity to claim that they are entitled to some or all of the estate’s assets. And (surprise!) when an estate is valued at $300 million, there is no shortage of people ready to come out of the woodwork. A small selection of those who have already stepped forward after roughly three weeks includes:
- Kimberly Felecia Potts – A Minnesota woman who was actually arrested for trespassing at Prince’s Paisley Park compound in January 2016. She claims she is due $500,000 because she “created” Prince’s 2004 album “Musicology” and Prince had promised to “reward” her for doing so.
- Rodney Dixon – A California man who claims he should be considered the “sole and exclusive owner of all intellectual properties after the death of Prince Rogers Nelson.” The basis for his claim is that he had an “implied agreement” with Prince, valued at $1 billion. Dixon claims he met Prince in Maryland in the early 1980’s and became close with him to the point that Prince wanted him to take control of his music and legacy. In speaking with the New York Daily News about why he is entitled to the estate, Dixon said: “He chose me because I’m the only one who gets it – spiritually, musically and legally. I’m the only one inside who got it all. That’s why I got it all.”
- Carlin Q. Williams – A Colorado prison inmate who claims to be Prince’s son, and as such, the sole heir of Prince’s fortune. If DNA tests confirm Mr. Williams’ claim (and if no one else is confirmed by DNA to be Prince’s biological child), then after claims like those above are either dismissed or settled, the entire remainder of the estate of the man who once wrote a pro gun control anthem with the lyrics “we’re tired of cryin’ and people dyin’ – let’s take all the guns away” will go to Mr. Williams, a man Prince apparently never met, and who is currently serving 92 months in a Colorado federal prison for possession of a firearm by a felon!
These claims (and others) are going to keep Prince’s estate in limbo for years, and will likely cost hundreds of thousands in attorney’s fees to litigate. To boot, while Prince liked to keep his private life very private, the disposition of his estate will play out in open court and be splashed all over TMZ and other media outlets.
As you might guess, I am using Prince’s tragic death to illustrate a point. The point is that much like having insurance, estate planning isn’t important until it becomes really important!
Much of the chaos surrounding Prince’s estate comes from the fact that no will has been found, and he did not own his assets in the name of a trust. So, this begs the question, how would things be different if Prince had done some estate planning?
What If Prince Had a Will?
If Prince had a valid will (but no trust), then a Probate action would still have to be filed in Carver County. However, instead of a “Special Administrator” being appointed by the court to facilitate the process, Prince’s will would have named an Executor (also known as a Personal Representative), who would have likely been a trusted advisor, friend or relative, to serve in that capacity. The terms of the will would also control as to who is to get what assets from his estate. If not otherwise named in the will, Prince’s siblings would have to file and prove claims that Prince had promised to take care of them in some way in order to recover any assets. Ms. Potts and Mr. Dixon could still file their dubious claims, but their legal path to prevailing on those claims would be even more difficult because they would have to overcome the fact that Prince left them out of his will. Mr. Williams would also be in a tough position. Merely proving that he is Prince’s biological son would entitle him to nothing from the estate, unless the will provided for him in some way. He would have to prove that Prince left him out of the will on accident. All of this would still play out publically – in open court.
What If Prince Owned Substantially All of His Assets In a Trust?
If Prince had established a revocable living trust and owned substantially all his assets in the name of that trust, then the courthouse in Carver County would be a lot less hectic than it is right now. This is because no probate action would have been necessary. In large measure, Probate is simply the legal process by which assets are transferred from the name of a deceased person to their heirs. When assets are held in the name of a living trust and the trust grantor/trustee/beneficiary (in this case, Prince) dies, there is no deceased person on title because the trust didn’t (and doesn’t) die. The trust would designate a successor trustee (again, probably one of Prince’s trusted advisors, friends or relatives) who is vested with the authority to distribute the trust’s assets as Prince directed in the trust, and without the need of filing a Probate action. The ability to avoid probate would likely save Prince’s heirs months of time and thousands in legal fees. In addition, the administration of a trust is private – no court filings are necessary. The lack of an existing and ongoing Probate action also means that claims like those made by Ms. Potts and Mr. Dixon would have to be brought independently. When hundreds of millions of dollars are at stake, such lawsuits would still likely take place. However, in a more “typical” estate, the lack of a ready-made forum for claims and challenges can dissuade potential litigation.
What Can you Do to Avoid this type of Saga?
The takeaway is that you don’t have to be worth $300 million (or even $300,000) for an estate plan to make sense. If you own real estate or an interest in an LLC or corporation, or even if you just have minor children or other dependents who would need to be taken care of if something happened to you, then estate planning is vitally important. It is an investment that will pay huge dividends in saved time, money and headaches for your loved ones when you are gone. Oftentimes, a Trust can be a simple and affordable addition to your overall Business and Asset Protection plan that merges into your Estate Plan.
Here is a Video to further explain how YOU can help your family avoid Court a potential mess after your passing:
The Bottom Line
Procrastination is easy – especially when it comes to something where the benefits won’t be apparent until you are either incapacitated or have passed away. However, if you care about saving your loved ones thousands in legal fees, months of time, and a mountain of headaches and worries, then completing your estate plan is truly a caring act of charitable service that you should consider completing before it becomes everlastingly too late.
Ironically, during the month’s of May and June each year, we offer an “Estate Planning Special” at the law firm of KKOS Lawyers. We complete Estate Plans in all 50 State with an Attorney in our office walking you through all of the details every step of the way- AND tailoring it to your situation. If interested, learn more about our Special here.
[co-authored with fellow attorney at KKOS Lawyers- Jarom Bergeson]
Mark J. Kohler and Jarom Bergeson are Attorney’s at the law firm Kyler Kohler Ostermiller & Sorensen, LLP. Mark is also a CPA, Radio Show host and author of the new book “The Tax and Legal Playbook- Game Changing Solutions For Your Small Business Questions” and “What Your CPA Isn’t Telling You- Life Changing Tax Strategies”. He is also a partner at the accounting firm K&E CPAs, LLP. For more information visit him at www.markjkohler.com.