In Perspectives

Being a Minnesota native, my first thought on hearing about Prince’s passing was “how can this be?! Is it a horrible hoax?” He was an icon in Minnesota, and growing up in the ‘90s meant I was practically raised on his music.  My senior class song was even “1999” (yes, that is the year I graduated too).  Being a former estate planner,  my second thought was “I’d love to take a look at his estate plan” with all those royalty agreements, real and personal and intellectual property . . . oh the paperwork that one would have!  When I heard there was none, I was shocked.  How can this iconic figure, who was known to be incredibly charitable and a pillar in the community, die without having put anything in place for his estate?  And what does this mean?!

As you no doubt have heard, the family is already fighting.  There is one full blood sister and a handful of half siblings.  The Minnesota statutes covering intestate succession start at 524.2-101, and section 103 states who gets what when there is no spouse (Prince was not married).  First would be any descendants, but he did not have any known children; then would be the parents, but they were both deceased as well, so the “descendants of the decedent’s parents or either of them by representation.”  This means that half siblings get a slice of the pie.  The term “by representation” means that each member of the same generation receives an equal share – so every half sibling and full sibling will get the same amount.

Speaking of amounts – about how much will that be?  Well, because there was no estate planning done, good old Uncle Sam is going to get a nice big chunk . . . actually almost half! Minnesota has a state estate tax with an exemption amount of only $1.6M, with the estate tax rate of 16%; the federal exemption amount for 2016 is a little more generous at $5.43M, but the tax rate is a whopping 40% – this means anything over the exemption amount is taxed at that rate!!  Say Prince’s estate is valued at around $300M, the government is getting $117,800,000+, leaving “only” $182,200,000 for the siblings to squabble over.

While the siblings will all still get a nice share, the take home points are these:
(1) Do you really want the state you live in deciding who gets your money and your stuff when you die?  If the tabloids can be believed, one of the half siblings wasn’t even allowed to come to the memorial service because no one liked him – presumably not even Prince.  Furthermore, Prince gave a lot to the community and to communities all over, did he really want his money going to siblings and half siblings, and did he want to create family turmoil?!

(2) Taxes.  I’m all for paying my taxes and contributing my part, but all that money in Prince’s estate, he’s already paid taxes on (Minnesota does have income taxes), so why pay them again?  Also, he was a known Jehovah’s Witness, which means he did not get involved with politics or formally acknowledge the government (although they do obey laws so long as it does not conflict with religious beliefs) – now, that government is getting a big portion of all he worked for.

You may not be on the same financial level as Prince, but you should learn from this.  Protect your assets, protect your family relationships, and talk to your estate planning attorney about setting up an estate plan.  For referrals to an attorney in your area, contact Legacy Trust.

Legacy Trust and Your Right to Financial Privacy

At Legacy Trust we have established policies and practices that respect the financial privacy of all individuals who use our trust company. We believe it is critical to comply with the laws and regulations designed to secure your financial privacy. Your relationship with us as our client is very important to us, and we want you to understand our policies and practices about handling your information.

This Policy applies to you – This Policy applies to our relationships with individual clients who inquire about or obtain products or services from us for personal, family and household purposes.

Strict security measures – We take the security of information very seriously. We have established security standards and procedures to prevent access to client information. We maintain physical, electronic and procedural safeguards to guard client information.

Limited employee access – We have established procedures to limit employee access to information to only those employees with a business reason for accessing such information. We educate our employees about the importance of confidentiality and client privacy. We take appropriate disciplinary measures to enforce employee responsibilities regarding client information.

Why we collect information – We collect information about you to:

  • accurately identify you;
  • protect and administer your records, accounts and funds;
  • help us design or improve our products and services;
  • understand your financial needs;
  • save you time when you apply for new products and services; offer you quality products and services; and comply with certain laws and regulations;

We collect information – We collect and maintain your personal information so that we can provide investment management and other services to you. The types and categories of information that we collect and maintain about you include:

  • Information we receive from you to open an account or provide investment advice or other services to you (such as your home address, social security number, telephone, financial information and investment objectives).
  • Information that we generate to service your account or from our transactions with you (such as account statements and other financial information).
  • Information on your transactions with nonaffiliated third parties.

We have established procedures so that the financial information we collect is accurate, current and complete. We are committed to work with you to promptly correct any inaccurate information.

Our selective sharing of information – In order for us to provide investment management and other services to you, we do disclose your personal information in very limited instances, which include:

  • Disclosures to nonaffiliated companies as permitted by law, including those who help us service your account (such as providing account information to brokers and custodians).
  • Other limited disclosures as permitted by law, for example, required reports to government entities.

We do not share your information with third parties for marketing purposes. We do not sell your information.

Former clients – If you end your relationship with us, we will continue to adhere to the privacy policies and practices described in this notice.

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USA PATRIOT Act

Important Information About Procedures For Opening A New Account

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account.

What this means for you: When you open an account, we will ask for your name, address, date of birth and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents.

We apologize for any inconvenience this may cause; however, federal law prohibits us from waiving these requirements.

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