Key takeaway - Creating and maintaining a legally valid estate plan is essential for most people. Make sure you have one in place and review it periodically to ensure it reflects your current circumstances.

How do we help? - As part of our holistic approach to wealth management, our team can provide a comprehensive estate plan review which can help you understand how your plan is structured and ensure it aligns with your current wishes.

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“Dearly beloved…we are gathered here today to get through this thing called ‘life’…electric word, life, it means forever…and that’s a mighty long time…”^[1]

If you didn’t recognize those lyrics (and honestly…you should have) those are the iconic opening words to the song “Let’s Go Crazy” by Minnesota rock and roll legend, Prince. Although a musical genius in his own right, Prince was wrong about average human life expectancy.

Sadly, life does not last “forever” and that is why it is crucial to have an estate plan in place to ensure your assets are passed on according to your wishes when the “Grim Reaper come knocking on your door.” (I wish I could tell you that’s the last Prince lyric you’ll read in this article, but it will not be.)

A prolific songwriter and producer, Prince managed to release nine albums during the 1980s alone, including timeless hits like "When Doves Cry," "Raspberry Berets," and the aforementioned "Let’s Go Crazy."

Prince was such a savant that by the age of seven he had already taught himself to play the piano and written his first song entitled “Funkmachine.” I don’t know what you did in elementary school, but when I was in 2nd grade, I was definitely not talented enough to teach myself a musical instrument. Furthermore, I can report with full confidence that 7-year-old Sheldon would have never have thought, “What if I wrote a brand new song and called it…oh I don’t know…Funkmachine?” Prince was seemingly born to make music.^[2]

Unfortunately, Prince might have spent a little too much time in the recording studio with his band mates in The Revolution because he completely forgot to create and execute an estate plan.

Prince died over eight years ago, but the war over his estate is still on-going. After his shocking death in April 2016, his heirs fought in court through 2022. The lengthy and extremely expensive legal dispute over his estate seemed to have finally come to end until January 2024 when two former business advisers to Prince filed a lawsuit against three of Prince’s heirs over control of “Prince Legacy LLC,” a holding company that was created to “preserve and protect Prince’s legacy and intellectual property.” The case is still on-going here in October 2024.^[3]

The legal term for passing away without a will or “anything to testify to what his wishes were with respect to the disposal of his property after his death” is intestate. In layman’s terms, if you die without a legal will you will be considered to have “died intestate” and the distribution of your assets will be determined by a probate court in accordance with your state’s intestacy laws.^[4]

This legal proceeding has the potential to be a lengthy and expensive process that could create fighting and distrust between family members who otherwise should be focused on grieving and comforting one another during a difficult time.

And that is exactly how things played out for Prince. The distribution of Prince’s estate involved multiple law firms and racked up millions of dollars in legal fees. Legal disputes occurred over the value of the estate, tax obligations, and the management of his unreleased music.

Complicating matters was that two of Prince’s heirs who were entitled to inherit a portion of his estate passed away during the legal proceedings. At one point the Internal Revenue Service (IRS) even got involved by arguing that that the estate was undervalued by over $80 million which allegedly entitled the IRS to additional tax payments and fines.

Prince’s failure to create and execute an estate plan during his lifetime has resulted in over eight years of judges, law firms, the IRS, heirs, creditors, and management companies arguing over hundreds of millions of dollars. Pretty scary, right?

Here are five lessons you can learn from Prince’s mistake:

1 - Preserve Long-Term Family Legacy

An estate plan ensures that your assets are distributed, and your final arrangements are carried out according to your specific wishes. Without it, state laws may dictate how your assets are divided, which might not align with your intentions. Proper estate planning can help bypass the lengthy and costly probate process, allowing your heirs to access their inheritance faster and with fewer legal hurdles.^[5]

2 - Minimize Taxes and Legal Costs

Estate planning strategies can help ensure the amount of tax due is reduced or eliminated so your assets remain a part of your legacy.^[6]

3 - Protect Your Loved Ones

An estate plan allows you to appoint guardians for minor children and provide financial security for them and other dependents. It also helps avoid family conflicts over inheritance and decision-making.

4 - Support Charitable Causes

If you have philanthropic goals, an estate plan can include charitable bequests or set up a trust to continue supporting causes you care about even after your death.

5 - Business Succession Planning

For business owners, an estate plan can outline a strategy for passing on the business to heirs or partners, ensuring its smooth transition and continued success.

Remember, even after you have a comprehensive estate plan in place, it is not a “set-it-and-forget-it” type of document. It is essential that you revisit your plan at least every three to five years or after major life events. If you’re moving to another state, growing your family, or maybe just experienced a significant change in health, we want to sit down with you and review your estate plan to make sure it still coincides with your current situation.^[7]

Final Thought

There’s an old saying that highlights the importance of preparation: “Never get caught in the rain without an umbrella.” Don’t make the same mistake as Prince—ensure you’re prepared with an estate plan before the purple rain falls. (Ok, that really was the last Prince lyric reference, but you have to admit, it was a pretty good one.)

[1] https://princelyrics.co.uk/song/Prince-lets-go-crazy-deluxe-song-lyrics/
[2] https://rockhall.com/wp-content/uploads/2024/03/Prince_2004.pdf
[3] https://www.forbes.com/sites/matthewerskine/2024/01/17/the-battle-for-princes-estate-unending-conflict-legal-drama-and-lessons-for-family-business/
[4] https://thelawdictionary.org/intestate/
[5] https://www.bairdwealth.com/insights/wealth-management-perspectives/2024/07/you-yes-you-should-have-a-plan-for-your-wealth/
[6] https://www.bairdwealth.com/insights/wealth-management-perspectives/2022/11/when-should-you-revisit-your-estate-plan/
[7] https://www.bairdwealth.com/insights/wealth-management-perspectives/2022/08/the-basic-elements-of-estate-planning/

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