Nearly half of Prince's estate, worth an estimated $200 million, will go to Uncle Sam because he left no known will when he died last April of an accidental painkiller overdose. The music icon did nothing to shelter his assets from the taxman, so roughly $100 million will go to the government for federal and state taxes.
Experts say Prince could have prevented this by setting up an estate plan with trusts to benefit any relatives and charities he chose while leaving little if anything to be taxed. Instead, the value of Prince's estate is now subject to a federal tax of 40 percent and Minnesota's tax of 16 percent. With exclusions and deductions, the total amount will be closer to 50 percent.
Prince's six siblings are expected to equally split what's left. His estate has until Saturday to file an estate tax payment. They can seek an extension for filing the return but can't delay the first payment. Since Prince's estate isn't very liquid, it helps that they don't have to pay the entire amount at once. A recent inventory listed about $110,000 in cash, about $830,000 in gold bars, but no stocks or bonds. It also listed real estate worth about $25.4 million. That inventory doesn't include his entertainment assets, which are still being valued.
It's not clear whether the IRS and Prince's estate will agree on the value of his music catalog because it's difficult to put a dollar value on such assets. If it's similar to Michael Jackson's situation, it indicates a long court battle, as Jackson's court case finally goes to trial in Los Angeles next month over more than $700 million in taxes, interest, and penalties.
Experts say Prince could have prevented this by setting up an estate plan with trusts to benefit any relatives and charities he chose while leaving little if anything to be taxed. Instead, the value of Prince's estate is now subject to a federal tax of 40 percent and Minnesota's tax of 16 percent. With exclusions and deductions, the total amount will be closer to 50 percent.
Prince's six siblings are expected to equally split what's left. His estate has until Saturday to file an estate tax payment. They can seek an extension for filing the return but can't delay the first payment. Since Prince's estate isn't very liquid, it helps that they don't have to pay the entire amount at once. A recent inventory listed about $110,000 in cash, about $830,000 in gold bars, but no stocks or bonds. It also listed real estate worth about $25.4 million. That inventory doesn't include his entertainment assets, which are still being valued.
It's not clear whether the IRS and Prince's estate will agree on the value of his music catalog because it's difficult to put a dollar value on such assets. If it's similar to Michael Jackson's situation, it indicates a long court battle, as Jackson's court case finally goes to trial in Los Angeles next month over more than $700 million in taxes, interest, and penalties.
