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Will II - iStockUnfortunately, too many recent newsletters have focused on the death of musical legends. This month left us with another untimely death. Prince, whose legal name was Prince Rogers Nelson, died on April 21st at his Paisley Park recording studio and home in Chanhassen, Minnesota. As unbelievable as it may seem, according to his sister, Tyka Nelson, Prince died without a Will or other estate planning instrument, leaving a complex and vast estate that will take years to organize and administer. On April 27th, Minnesota judge, Kevin Eide, declared that Prince did indeed die intestate (without a Will) and appointed Bremer Trust as special administrator of the estate.

According to reports, Prince was not married at the time of his death and had no living children, leaving Tyka and his six half-siblings as the heirs of the estate. As is the case in Illinois, Minnesota law states that any “half-relative” inherits as if he or she was a whole-relative. Without a Will or Trust document stating otherwise, Price’s half-siblings are entitled to the same share of his estate as his full-sister, Tyka. There may also be additional relatives and creditors who file claims against the estate as the case proceeds in the Minnesota probate court.

Prince was widely-known to be a very private person, which makes it especially surprising that he did not bother to establish an estate plan. As discussed after the deaths of James Gandolfini and David Bowie, while a Will must be filed with the probate court after death, a Trust is a private document between the grantor (creator), trustee and beneficiaries. Privacy is not just a concern for celebrities. Due to the exposure and scrutiny of estates resulting from challenges by family members or creditors, keeping estate planning documents out of the public eye can be an invaluable benefit of a proper estate plan. By using a Revocable Living Trust in conjunction with a Pourover Will—which simply “pours” all of the individual’s assets into his or her Revocable Living Trust at death to be administered by the trustee under the terms of the trust document without revealing the terms of distribution—an individual can ensure that his or her affairs will remain private and out the view of the public, creditors or any dissatisfied family members or friends.  While the benefits of privacy are exemplified by celebrity estates, its value should not be underestimated for all estates.

Valuation, Tax Liability and Liquidation
It is shocking and disappointing that anyone would not have an estate plan, but especially someone who not only valued privacy but also had a sizable, complex estate. Even more disappointing is the fact that a large part of Prince’s estate may have to be liquidated to pay his estate tax bill, which could be as high as $150 million. Reports vary as to the value of his estate, but a large portion of it—his vaults of unreleased music and symbol—will take a long time to appraise. The estate tax return is due nine months after death, so unless a large portion of his estate was held in cash and marketable securities, the estate may be forced to liquidate large portions of his art, music and collections. Unfortunately, reports indicate quite the opposite—that his cash was limited because his concerts and releases were rarely organized and more often impulsive.

For fans of his music, the lack of an estate plan means that his unreleased music may never see the light of day. Had Prince appointed one or more individuals to handle his recordings in accordance with his wishes—a curator of sorts—the estate could have begun organizing and releasing the music almost immediately to not only please the fans but also generate revenue for the estate.

You do not have to legendary musician to need a proper estate plan. An unplanned estate will be a very expensive headache for your loved ones. If you do not have an estate plan or are unaware how your estate would be administered it is incredibly important to contact an estate planning attorney, have an estate plan established that reflects your wishes and inform your loved ones of its existence. It may encourage them to take responsibility over their own estate planning as well.



Girl on the Phone- iStockOwners of family businesses often find themselves in a dilemma over how to treat their adult children fairly when one or more is interested and capable of taking over the business and the other adult children are not.  Certainly, the owners are not about to turn over their life’s work to anyone (their closest kin included) without the required desire and skills to carry on the family business.  At the same time, the owners often want those same children to benefit from their life’s work.  Further complicating the matter, are the children who will someday be running the business and do not want their value diluted by having to share profits with a sibling(s) uninvolved in the day to day operations and taking the day to day risks associated with business ownership.

Enter life insurance.

Properly acquired (in other words, properly negotiated and priced), life insurance can be a tremendous equalizer, making sure that each adult child is treated fairly per the business owner’s wishes.  At the business owner’s death, the interested, capable adult children take over the business and the less interested, less capable children are assigned the life insurance proceeds.

The above is a clean, fair and pre-agreed to strategy for dealing with a very difficult planning issue in the family business arena.  This planning idea will not only deliver exactly what each adult child needs and wants at the owner’s death, it also eliminates resentment and creates peace between family members.  These non-economic/soft issues are not always expressed, but are always present and are a tremendously important part of any estate plan.


Empty Country Highway - iStockMany insured’s are confused and angered when the premiums of their “vanishing premium” life insurance policy, either don’t vanish or reappear at a later date.  If the policy was promoted and sold on a “vanishing premium” basis they ask, then “why am I still writing checks?”  The answer is very simple though not always properly disclosed or understood, even by the selling agent.  Premiums don’t vanish.  At some point, premiums may possibly, hopefully, be covered by the growth/performance of policy dividends and/or cash value but absent that performance, the premiums are still there, needing to be paid in order to keep a policy in force.

The above isn’t to be confused with a guaranteed, paid up policy which is a contract between the policy owner and the insurance company providing for a guaranteed death benefit to an agreed upon age of the insured and with an agreed upon capital contribution for an agreed upon period of years.  Once this obligation has been met by the premium payer, the death benefit will be sustained with no more premiums due and the peace of mind that this is provided for on a contractual basis.

Though subtly different by description, the actual differences are significant because the concept of a “vanishing premium” does not exist and the concept of a “guaranteed, paid up policy” does.

Be sure to ask these questions of your agent to spare yourself much confusion and overpayment of premium.


The Power to Revoke at Any Moment

by Sarah Sicheneder March 17, 2016 Uncategorized

A popular saying goes “bad planning on your part does not constitute an emergency on my part.”  Estate planners cannot rely on such platitudes.  It is our job to fix bad planning especially in emergency […]

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Spectrum of Withdrawal Limitations

by Manish Bhatia February 26, 2016 Beneficiary

The phrase “control from the grave” is often used to describe withdrawal limitations on an individual’s inheritance.  These provisions direct or require a beneficiary to reach certain benchmarks before a trustee can permit a withdrawal.  […]

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David Bowie’s Estate Plan

by Jamie Held February 19, 2016 In the News

It has been reported that David Bowie’s estate plan consists of a 20 page Will that was originally filed in 2004.  It splits the majority of his estate, estimated at $100 million, between his wife, […]

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5 Refreshing financial steps women should take before and during a divorce (or during any life transition)

by Kari McLeod February 19, 2016 Guest Articles

I know this is a finance post, but before I jump into giving you a checklist for financial steps to take before and during divorce, I first want to say: Stay positive and remember you […]

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What’s in a Name

by Bob Cohen February 5, 2016 Guest Articles

The life insurance industry has become increasingly complex. New and multiple policy types deliver both choice (a good thing) and complexity (not such a good thing) to your client’s decision-making. Policy names (Adjustable, Flexible and […]

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Powers of Attorney: Underrated Estate Planning Documents

by Manish Bhatia January 25, 2016 Guest Articles

Powers of attorney are very flexible documents used to reflect your wishes for decisions regarding your health care and control of your assets if you are ever unable to make those decisions yourself.  If you […]

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Using a Testamentary Letter to Explain Your Estate Plan

by Robert Lynn January 20, 2016 Beneficiary

Your estate plan likely includes formal documents (a will, perhaps one or more trusts) that direct transfers of your property when you die. But those documents won’t identify each and every item to be transferred. […]

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The Missing Will

by Manish Bhatia January 11, 2016 Beneficiary

The Missing Will Do you know where your original Will is located? You should, and so should your executor. The dilemma of a missing original Will has come up in the death of Melissa Mathison, […]

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