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As death tax looms, Prince’s estate may stay in limbo for years

UNS-Prince-at-YesWeCode-lauAs death tax looms, Prince’s estate may stay in limbo for years

By Avis Thomas-Lester,Urban News Service

How much is a vault of unreleased songs worth? What’s the value of a guitar played by a musical genius?

Is Uncle Sam owed anything on a chifforobe full of rock star finery? And, what’s the going rate for a “glyph” created to protest against an artist’s record company?

These are among the questions likely being pondered by the heirs of Prince Rogers Nelson, aka Prince, and the court-appointed administrators of his estate. Prince died without a will on April 21 at age 57, cause unknown, at Paisley Park Studios — his home and office complex in Chanhassen, Minnesota. Authorities found no evidence of foul play. Autopsy results remain unreleased.

As Prince’s fans continue to grieve his death, the clock ticks on the arduous process of settling his estate, estimated at $100 million to $300 million. Since The Artist died parentless, spouseless and childless, Minnesota law requires that his estate be divided equally among his sister, Tyka Nelson, 55, and his five living half-siblings: John, Norrine and Sharon Nelson; Alfred Jackson; and Omar Baker.

But before that happens, the U.S. government and the state of Minnesota will take significant chunks of Prince’s wealth in estate taxes. These taxes will be even more substantial because he died without directing his assets into trusts, charitable donations and other shelters that would have lowered his tax obligation, lawyers said. More than half of American adults are estimated to die without wills.

“Wills are good stewardship and good management of your assets, but to do a will means you have to contemplate death, and a lot of people don’t want to contemplate death,” said Orlan Johnson, a Washington, D.C.-based legal consultant who specializes in intellectual property issues. “Psychologically, for some people, it’s tough to do, even for somebody like Prince.”

Prince’s estate would have benefited significantly if he had written a will that continued his practice of giving. His friend, CNN commentator Van Jones, told the network that Prince gave generously to causes, including a solar-energy initiative called Green For All and #YesWeCode, which prepares underprivileged youths for tech careers. Jones founded both projects.

“There are people right now who have solar panels on their houses in Oakland, California, that they don’t know Prince paid for,” Jones said.

Jones said he collaborated with The Purple One on violence-prevention efforts in Baltimore, Chicago and New Orleans, where Prince played concerts to draw huge crowds that heard anti-violence messages. He then donated proceeds to relevant local charities.

“The music was one way he was trying to help the world, but he was [also] helping every day of his life,” Jones said.

Under federal law, a 40-percent estate tax, pejoratively called the “death tax,” applies to transferable assets that exceed $5.45 million. It must be paid within nine months of the departed’s death. Spouses are exempt from this tax.

Several states also levy inheritance taxes. Minnesota’s 9 percent to 16 percent estate tax is assessed on property exceeding $1.6 million.

The federal estate tax is filed via IRS Form 706 and its 31 pages of complex references. Harold Apolinsky — a nationally recognized, Birmingham-based estate-planning attorney who has worked for 20 years to repeal the estate tax — said the form ends up being “a 1/2 inch thick to 5 feet thick,” depending on the number of assets, appraisals and other information.

Apolinsky said if the IRS examiner reviewing the form agrees with the submitted value of the assets, the tax can be paid, and the process concluded. However, the IRS has three years to challenge the value. In that case, the estate may appeal the IRS finding in court. Beneficiaries unable to pay may enter into an installment plan with the IRS.

Apolinsky cited the continuing effort of Michael Jackson’s family to settle his estate seven years after he died. Although Jackson had a will, his heirs are disputing the IRS’s valuation of his name and image, according to Forbes.com. A February 2017 court date is set.

Johnson said the administrators of Prince’s estate will work with attorneys, accountants and appraisers to search every corner for assets. He said the team, with the approval of the heirs, may seek offers on some of Prince’s assets, such as the unreleased songs and the rights to use the glyph, which could be a marketing gold mine, to help determine the value of the assets.

“They could actually just hold an auction,” Johnson said. “There is nothing wrong with them selling assets, just as long as they pay the taxes.”

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    Carma Lynn Henry Westside Gazette Newspaper 545 N.W. 7th Terrace, Fort Lauderdale, Florida 33311 Office: (954) 525-1489 Fax: (954) 525-1861

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