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If Prince died without a will in place, as his sister suggests, his estate will be determined by a Minnesota probate court and likely will come with a hefty tax bill.
Tyka Nelson filed paperwork Tuesday morning in Carver County District Court seeking to appoint Bremer Trust as special administrator of her brother’s estate. She claims Bremer Bank has worked with Prince for a number of years and is familiar with his personal and business finances.
The court won’t just accept Nelson’s assertion that her brother didn’t have an estate plan, of course. After all, Michael Jackson’s will, unbeknownst to his family, surfaced after his untimely death in 2009. So Nelson will have to prove she looked high and low for any relevant documents and discussed the issue with the various lawyers, agents and managers that have worked with Prince over the years.
“It is not impossible that an old will could be found,” says Anita S. Rosenbloom, a trust and estate attorney at Stroock. “It could be relating to a period in his life when he was attached to different individuals. That would be enforceable.”
Donald David, an attorney who has worked with the estates of several recording artists including Tupac, agrees with that assessment. “My bet would be ultimately a will would turn up,” he says. “Certainly it’s going to take a minimum of several months to complete that search with proper due diligence, particularly if he has had a number of business, financial and legal advisors over time.”
If there really is no will, Minnesota statutes and federal tax code will dictate who gets what and at what cost. Attorneys point out that his sister and five half-siblings each would inherit one-sixth of the estate since Minnesota law treats all siblings the same.
Prince’s estate will have to foot a potentially huge tax bill. Rosenbloom estimates that if Prince’s taxable estate is valued at $250 million (that’s a conservative estimate, based on reports following his death), the icon’s heirs could be looking at a bill for about $120 million in state and federal estate taxes.
Robert E. Strauss, an estate planning attorney at Weinstock Manion, says he was appalled when he read Prince had no will. “It’s a mess,” he says. “It’s unlikely to be consistent with what he would otherwise have wanted to do.”
“In the absence of a contribution agreement, the charities would get nothing,” Strauss says.
Burton Mitchell, chair of Jeffer Mangels’ trust and estates practice, says it’s hard to imagine that splitting Prince’s assets evenly among his siblings with nothing going to charity and no mechanism to protect his copyrights is what Prince would have wanted.
The biggest challenge won’t be dividing financial assets, Mitchell says, but rather putting a price on the icon’s legacy itself.
“His estate is not cash,” Mitchell says. “It’s his name, likeness and image. What is Prince’s image worth as of the date of his death? Who is going to value that?”
Attorneys say Prince’s heirs could face a clash with the IRS similar to the one the agency is having with Michael Jackson’s estate. “The IRS believes, from what I hear, the Jackson estate is worth far more than appraisers say it was worth on the day of his death, and that’s a problem,” Mitchell says. “It’s going to be a problem for Prince.”
After calculating exactly what the estate owes the IRS, the icon’s heirs are going to have to figure out how to pay it.
“The value of the estate is primarily due to the copyrights,” Mitchell says. “That’s definitely not cash. The music is going to throw off revenue to them every year, but I doubt he has $100 million sitting in cash.”
Requesting that an administrator be appointed is an important first step for Tyka Nelson, 55. But David isn’t yet sure if Bremer Bank is the right choice. “They’re going to need somebody, or a couple of people, who have experience in exploiting the brand of an artist as diverse as he is,” he says. “People who know how to maximize the various streams of income.”
It is rumored Prince left behind enough unpublished music to fill more than two dozen albums.
“This is a cautionary tale,” David adds. “The very fact that we’re having this conversation about what happens if he didn’t have a testamentary instrument tells me that people really need to understand that they need to do this. These people really should be thinking about what their legacies are beyond the artistry they create.”
So whoever handles Prince’s estate will be dealing with paying off debts, capitalizing on intellectual property, valuing the icon’s image and calculating his monetary and real estate assets — potentially in multiple states. Prince’s Paisley Park estate will be part of the Minnesota probate proceedings, but any real estate he owns outside of Minnesota will be addressed in the local courts.
After the estate is sorted, there will inevitably be lawsuits.
“There’s always litigation in an estate like this,” Mitchell says. “Someone’s going to allege he promised them he was going to do something. It’s too much money and a lack of planning always leads to trouble.”
Tyka Nelson’s attorney Matthew Shea could not be reached for comment.
A Bremer Bank spokeswoman sent The Hollywood Reporter the following statement: “Bremer Bank respects the privacy of our customers and it is our policy not to reveal the names of our customers or information related to requests for services. As a community focused company, our sympathies are with family and fans in mourning the loss of a talented musician and Minnesotan.”
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