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The Government’s Win from Prince’s Death by Scott Montgomery, CLU, ChFC

Posted on February 28, 2017

April 2017 marks the one year anniversary of the untimely death of Prince, the legendary performer who passed away last year without a will or any plan for protecting an estate that has recently been valued at more than $200 million.  Without the benefit of a will or a revocable trust, Prince left all decisions regarding his estate in the hands of Minnesota, where we resided, and its intestate laws. Furthermore, because Prince failed to engage in any tax planning before his death, it is likely that more than 40 percent of his estate will go toward federal estate taxes and probate fees.

The resulting tax liability translates to approximately half of Prince’s assets going to the government rather than to the six heirs that a court decided could stake a claim to the singer’s estate.

Prince’s lack of a will or any form of estate planning is an important lesson to all individuals, whether they have millions of dollars in assets or a small nest egg.  As the saying goes, there are only two certainties in life: death and taxes. An unwillingness to plan for either is a recipe for disaster.

Estate planning considers not only the assets an individual owns, such as personal property, retirement savings or a family business, but it does so in the context of an individual’s personal wishes, his or her responsibilities and family relationships and needs.  Options to consider in the estate planning process may include a revocable trust that specifies how an individual wishes to distribute assets outside of probate, an investment in a life insurance policy to potentially provide named survivors with an income-tax-free windfall, and/or the naming of beneficiaries to receive proceeds from life insurance policies or savings held in retirement accounts or trusts.  At the minimum, a revocable trust may have kept Prince’s financial affairs private and protected from the public’s prying eyes and subsequent scrutiny.

An estate plan also considers all of life’s “what-if” scenarios and prepares individuals and their families to manage these situations quickly and with the confidence in knowing that they abide by an individual’s wishes.  For example, a living will and durable health-care power of attorney allows individuals to plan and memorialize in writing their wishes should they become incapacitated.  Similarly, a financial power of attorney provides individuals with the freedom and control to appoint someone they know and trust to oversee their financial affairs when they are no longer able to do so.

By failing to address and plan for these issues during life, an individual essentially gives up control over his or her legacy to the government and leaves behind an immense burden for family members.

The professionals with Provenance Wealth Advisors work closely with domestic and foreign individuals to assess current financial, familiar and business circumstances and develop comprehensive estate plans that overcome complexities and meet desired goals.

About the Author: Scott Montgomery, CLU, ChFC, is a director with Provenance Wealth Advisors, an independent financial planning services firm affiliated with Berkowitz Pollack Brant Advisors and Accountants, and a registered representative with Raymond James Financial Services.  For more information, call (954) 712-8888 or email info@provweath.com.

Provenance Wealth Advisors, 515 E. Las Olas Blvd., Ft. Lauderdale, FL 33301 (954) 712-8888.

Scott Montgomery is a registered representative of and offers securities through Raymond James Financial Services, Inc., Member FINRA/SIPC.

Raymond James is not affiliated with and does not endorse the opinions or services of Berkowitz Pollack Brant Advisors and Accountants.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of the advisors of PWA and not necessarily those of Raymond James. You should discuss any legal matters with the appropriate professional. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investments mentioned may not be suitable for all investors.

 

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