Prince appears to have died without a will, and if none is found, we can expect to see some messy litigation. If Prince had been married, his wife would have received his entire estate tax-free. But since he was not, if no will is discovered, it means the federal government will take 40% in taxes for accumulated wealth above $5.45 million and Minnesota another 16% over $1.6 million.
What’s left would be divided among his sister and five half-siblings, each taking 1/6 under Minnesota law. Evaluating the worth of his estate is going to be contested also, because worth includes not just physical property such as real estate, investments and cash but copyrights on both published and unpublished works, as well as the worth of his name and image.
How Death Taxes Impact the Economy
Because of the high amount of income required before the death tax kicks in, it does not apply to that many Americans, but it does have a considerable impact on family businesses and their communities through lost jobs and reduced growth. If a business owner does not leave behind other assets of substance, the business may have to be sold. The Heritage Foundation has estimated that this results in 18,000 lost jobs each year.
How the IRS the Estate Prince Left Behind
Of course, Prince’s enterprise wasn’t your everyday family business. His estate’s worth is estimated between $300 and $500 million. A large value of the estate is in copyrights. Since he was relatively young when he died, 57, he has fans who can spend on Prince music and other Prince-related items for many years. And we’re not just talking about the music we already know. It’s estimated that he has enough unpublished material to make two dozen albums. Beyond his music, his image is valuable, and it’s not going to be easy to measure that value. The IRS estimated Michael Jackson’s image at $434 million, which was contested by the Jackson’s estate.
Prince’s estate now has nine months to file its tax return and estimate his net worth. The IRS then has three year to challenge the estimate. And probably will.