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Taxes might take big bite of Prince's estate

Prince's estate has been in the news ever since the musician passed away earlier this year. While it's not unusual for a celebrity's estate to make headlines, particularly as heirs battle over various assets, Prince's estate makes the news for other reasons. First, because the celebrity apparently didn't leave a will or any estate plans. Second, because he also didn't leave any obvious heirs, though numerous people have come forward claiming to be heirs.

The estate is set for a probate hearing later this month. Meanwhile, a temporary trustee has been appointed and the trustee is beginning to work to try to safeguard estate assets. One step the trustee took is to ask a judge for authority to hire industry professionals to help with the business side of the estate, which includes all of the musician's rights to creative works.

The trustee has also brought forth another issue. As it stands, the estate is not protected by any estate planning measures such as wills or trusts. Without a will or any other planning, the estate's taxes are set to come due early in 2017. The value of the estate isn't protected by any type of tax shelter, and the trustee estimates that the taxes are going to be about half the total worth of the estate.

To add to the issue, the estate isn't particularly cash heavy. That means there is a lot of value in the estate that isn't currently monetized, which means the trustee must monetize parts of the estate before taxes can be paid. This is one reason the trustee is seeking assistance from industry professionals.

This is a great example of how not leaving a will can result in snowballing problems for heirs or executors. While many people don't have the type of expansive estate Prince held, if you don't have a will, then your assets and debts are left at the mercy of the courts and may not be protected as you like.

Source: ABC News, "Taxes on Prince's Estate Could Be Half Cash Value, Says Trustee," Janel Klein, June 08, 2016

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