When a person in California dies without a will or an estate plan, it can cause a world of problems for the people left behind. The estate will typically go through a long and expensive probate process as courts work to determine how any assets or liabilities should be handled. If any part of the estate is not valued properly, the impact to heirs can be long reaching as it may affect taxes and other legal matters. When rock singer Prince died in 2016 without any estate planning in place, some may have assumed that his high net worth would have made up for that oversight, but now the value of his estate is in question, which could cause significant problems for his heirs.
The administrator of Prince’s estate, a banking firm, originally valued it at more than $80 million. The Internal Revenue Service now says that that estimate is not nearly high enough, as his interests with recording and music publishing push the value much higher. The IRS claims that his estate should be valued at more than $160 million, nearly double the amount of the original valuation.
What’s worse is that this means his estate owes more in taxes and will also have to pay a large penalty for the inaccuracy. The taxes owed add up to more than $30 million and the penalty is around $6.4 million. Not only does that reduce the value of the estate overall, but this could further delay Prince’s heirs, his siblings, from receiving their share of his estate.
Estate planning matters
Though this is an unusual example, it still shows just how important it is for a person to engage in proper estate planning. Not only will a comprehensive estate plan, created by an experienced California attorney, include a will and other directives for the distribution of an estate, but it will contain a more accurate estimate of an estate’s worth. This will help streamline the probate process and facilitate the dissemination of the estate to the rightful heirs.