UPDATE: Death of Superstar Prince Means Windfall for the IRS
Last May we wrote about the death of rock superstar Prince. At the time we pointed out that whenever a celebrity dies, there’s always a ripple effect. The death of Casey Kasem prompted increased interest in issues of health care directives, guardianship and end of life planning. The death of Michael Jackson shed new light on the abuse of prescription drugs. And just a few weeks after the death of the rock star Prince, who died in April of 2016 without a will, people began showing a surge of interest in wills and estate planning. (Click here to connect to the original Reuters article about this interesting phenomenon.)
Well, now we have a truly eye-opening follow-up report, which we found in this insightful article on an unlikely website called Movie TV Tech Geeks! We confess, this isn’t one of our typical sources of retirement news, but in this case the writer, Television Editor Shanka Cheryl, really got it right. The article is entitled, “Prince shows why wills really matter as IRS getting half his estate.” We suspect many readers of this website might be on the younger side, but this article should be a loud wake-up call to everyone, especially seniors.
Prince died on April 21, 2016, leaving behind an estate valued at more than $200 million. Apparently the international celebrity never got around to drafting a will or establishing an estate plan. Prince was not a particularly young man (he was 57 at time of death) but like many aging boomers he may have had a distorted sense of his own immortality. He was hardly alone: research from LexisNexis reveals that at least 55 percent of all American adults do not have a will or other estate plan in place.
Now, Shanka Cheryl’s article explains, “Prince’s estate has until Saturday (January 20th) to file an estate tax payment for the late rock superstar, and the taxes are expected to ultimately swallow nearly half the estate’s estimated $200 million value.” That means “a likely windfall of roughly $100 million for the government.” Estate law experts say Prince could have prevented that relatively easily, but he failed to act in time.
Not only did Prince leave no known will when he died in April of an accidental painkiller overdose, but he apparently did nothing to shelter his assets from the taxman. Federal and state taxes will claim about half the estate and his six siblings will divide the rest, say local tax experts studying the case. “Experts say Prince could have set up an estate plan with trusts to benefit any relatives and charities he chose – while leaving little if anything to be taxed.” The website article quotes Los Angeles attorney Robert Strauss who stated that there are basically only three options for distributing estate funds: “There’s family and friends, there’s charity, and there’s Uncle Sam. And most clients would rather that Uncle Sam got less.” In Prince’s case, by failing to plan, he made sure Uncle Sam received a generous payday.
As the Reuters article reported last spring, following the death of Prince, “many Americans moved ‘draft a will’ – arguably one of life’s most unpleasant tasks – to the top of their to-do lists.” In some ways, as we reported, that’s good news. However, as professional retirement planners, we here at Aging Options fear that some of these newly-inspired people may be going about the process the wrong way, relying on free or low-cost will-writing software and websites that provide only bare-bones services, hardly adequate for most estate plans. If you content yourself with simply seeking out the least expensive “quickie will kit” available online you will be doing yourself and your family a disservice. This is one area where it’s essential not to scrimp! The cheapest and quickest route is almost always the wrong one.
We also remind you, as we tell our radio listeners and seminar guests, that merely writing a will is not enough. The process of putting your legal affairs in order is only one aspect of a fully-developed retirement plan, which we call a LifePlan. A LifePlan takes the key facets of your future planning into account: legal affairs, financial security, medical care, housing choices and family communication. This is the kind of comprehensive plan that brings true security as you age. It’s also the kind of well-developed plan that you can never get from an online will kit!
Want to find out more? Here’s the best way: attend one of our free LifePlanning Seminars, held throughout the area. There’s absolutely no obligation – and we’re fully confident that you’ll come away armed with a fresh new approach to retirement. These free information-packed sessions fill up quickly, so click here for a listing of upcoming LifePlanning Seminars, select the seminar of your choice, and register online – or call our office during the week and well gladly assist you.
Making a will is important. But having a LifePlan in place will be of far greater benefit. If only Prince had known that, his family could have been spared even more grief, dissension and loss.
(originally reported at www.reuters.com and https://movietvtechgeeks.com)