Robbins: Prince’s estate mess shows why you need a plan
When The Artist Formerly Known as Prince died, he left a purple mess.
Although he died nearly 5 years ago — can you believe where the time goes?! — his estate was not fully and finally valued until January of this year. When the “this and that” were finally added up, what he left amounted to a fairly hefty sum — $156 million to be precise.
With that, the six-year legal battle over the pop star’s estate finally reached its end. What that means is that the process of distributing the artist’s wealth could begin, likely, this month.
Presumably, Prince did not expect to die. He was only 57, and the police report attributed his death to an accidental overdose.
So, maybe he had more time. …
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The way things worked out, though, Prince died intestate. He died without a will. And what that wreaked was havoc.
Since his death, various lawyers and consultants have been paid a ton of dough to administer his estate and come up with a plan for its distribution, much if not all of which could have been avoided had he only had estate planning documents the lawyers, his intended heirs and the courts could have relied on.
Two of Prince’s six sibling heirs have since died. Two others are in their 80s. Who it turns out will get the bulk of his considerable estate is Primary Wave, a music company, and the three oldest of his six heirs or their families.
When one dies without a will, it is up to the state and the state’s laws of intestacy to figure where the money goes. With an estate plan, things could have been much different.
If you are a resident of Colorado and you die without a will, you die “intestate.” If you die intestate, your property passes to your heirs in a manner prescribed strictly by statute. In other words, the state, not you, determines to whom the property will pass and how it is to be divided. Under present law, the property of an intestate passes one-half to his or her spouse and one-half to his or her surviving children. If there are no children, then the estate passes in full to the spouse. If there is no spouse, then the estate will pass in full to the intestate’s children. If there are neither children nor a spouse, then the property passes to the deceased’s parents. And so on.
A seminal reason for estate planning is to provide for circumstances where one wishes to make a different distribution of his or her property than that prescribed by the laws of intestacy.
The cornerstone of any estate plan is a will which must be written. A will ensures that there will not be intestacy. A will is your legal declaration of what you want done with your property in the event of your death. In Colorado, any person over 18, who is of sound mind, can make a will. For the simplest of estate plans, the only thing which may be needed or desired is a will. With more complex estates, more complex devices, such as trusts, are often called for.
Don’t be intimidated. Trusts essentially set up conditions which must be fulfilled or which must come to pass before someone gets a share of an estate (say for example, reaching a certain age). They can have lots of bells and whistles; what ifs, thens and therefores, but they can also be pretty straightforward. Sometimes, a trust can be as simple as directing someone to manage assets on behalf of a minor until the minor grows up and can manage things him or herself.
Many times, formulating an estate plan becomes essential when a couple first has a child. Before the arrival of children, most, but not all spouses, wish their property to pass in full to their spouse. There may exceptions, of course, and those should be dealt with in a will. But there may be other times as well, such as — in the case of Prince — where there was substantial wealth.
Once an estate plan is established, it should be periodically updated, essentially whenever there occurs a significant life event: the arrival of another child, divorce, remarriage, becoming empty-nesters or a substantial change in wealth or health.
Another significant reason to develop an estate plan is to avoid probate. Probate is the means by which the state ushers an estate through court. By careful planning, probate can usually be avoided.
“But why,” you may ask, “do you want to avoid it?”
It takes time. And money. And the court files are public record.
Another common reason to develop an appropriate estate plan is to minimize the tax consequences of one’s death. By careful crafting, property can be transferred to one’s heirs with a minimum of pain.
Other things you’ll likely want to have prepared are a living will, medical and general powers of attorney and a letter of last instruction. The living will directs your medical care if you’re not in a position to say what you want. The powers of attorney designate someone you have chosen to act on your behalf in medical and business decisions if you become incapacitated.
Had Prince died with an estate plan, the lawyers would be poorer, his heirs most likely be richer and whole fistfuls of time, stress, fighting and friction might have been avoided. And to be becalmed following the tragedy of a death is, after all, a good thing.
Rohn K. Robbins is an attorney licensed before the Bars of Colorado and California who practices Of Counsel in the Vail Valley with the Law Firm of Caplan & Earnest LLC. His practice areas include: business and commercial transactions; real estate and development; family law, custody and divorce; and civil litigation. Robbins may be reached at 970-926-4461 or rrobbins@CELaw.com. His novels, “How to Raise a Shark (an apocryphal tale)” and “The Stone Minder’s Daughter,” are currently available at Amazon.com — and coming soon, “Why I Walk So Slow.”