VOLUME 21, ISSUE 2 ADVISOR’S BULLETIN WHAT’S IN THIS MONTH’S NEWSLETTER DYING WITHOUT AN ESTATE PLAN: THE SETTLEMENT OF PRINCE’S ESTATE Michael W. Lagos, CFP® President A MESSAGE FROM Robert L. Langsam MICHAEL W. LAGOS, CF P ® Director of Tax Strategies Dear Strategic Advisor: Jane M. Roberts Director of Client Those of us who provide life insurance and financial advice to clients understand the im‐ Services portance of planning for the death-me transfer of wealth. Many financial professionals Justin P. Boren , PHD find it advantageous to work closely with estate-planning aorneys and tax professionals so Chief Compliance that our clients get the benefit of comprehensive and coordinated advice. Officer We have wrien in the past about situaons where celebries passed away and their estate Samuel Escobar planning had not been perfect: Financial Advisor · In the June 2019 issue of Advisor’s Bullen, we discussed how Aretha Franklin apparent‐ ly tried to dra her own will documents. Unfortunately for her children and other po‐ tenal heirs, the handwrien pages le many important quesons unanswered and forced her heirs into a probate court fight. · In May 2017, we explained how Dr. Jerry Buss’s estate plan ulmately led to a family fight aer his death over the control of the Los Angeles Lakers NBA franchise. The Advisor’s Bulle- tin is provided by · In April 2018, we described how the owner of the Detroit Pistons, Bill Davidson, failed L AGOS W EALTH A DVI- to make solid plans for the connuaon of the business following his death. The failure SORS AND L AGOS F INAN- CIAL & I NSURANCE S ER- was a significant factor that resulted in his sports empire being sold by his widow at a VICES , I NC . I t i s i n - fracon of its expected worth just a few years aer Davidson’s death. tended to serve as a resource for the · advisors which we In April 2016, Prince Rogers Nelson—beer known as simply Prince—passed away unex‐ are associated with. pectedly at his home in suburban Minneapolis. Although Prince owned music-related Recent develop- assets worth tens of millions of dollars, he apparently passed away having prepared no ments in estate, business, and insur- estate-planning documents. ance planning are outlined for your Prince’s failure to plan for his death has made maers difficult for his heirs. The post-death reference. Should you wish to receive story provides lessons for us all. additional infor- mation related to financial planning, Please feel free to contact our office with any quesons. estate planning, insurance planning, or investment man- Regards, agement, please do Michael W. Lagos, CFP® 1320 VALLEY VISTA DR IVE, SUITE 202 DIAMOND BAR, CA 91765 866.444.4964 WWW.LAGOSADVISORS.CO M Page 2 DYING WITHOUT AN ESTATE PLAN: THE SETTLEMENT OF PRINCE’S ESTATE BACKGROUND Life Born June 7, 1958, in Minneapolis, Minnesota, Prince was the son of musicians and was writing and performing mu- sic from his earliest years. Prince’s rise to stardom began with his debut album, For You, with the lead single, “Soft and Wet,” making a moderately strong debut on R&B radio and cracking the Billboard Hot 100 at No. 92. A second, self-titled album went platinum and yielded two more popular singles, “Why You Wanna Treat Me So Bad?” and “I Wanna Be Your Lover.” Prince's crossover potential was rising, as he made it to the top 20 of the Hot 100 and performed on American Bandstand in 1980. In 1982, Prince released his 1999 double album. The title track, “Delirious,” and “Little Red Corvette” were widely played. His 1984 album, Purple Rain, accompanied the critically and commercially successful movie of the same name, in which Prince starred in his film debut. The dual offering helped Prince virtually dominate the pop culture of the year, with the album sitting at the top of the charts for 24 weeks and yielding hit after hit. The movie won an Academy Award for best original song score. The title track from Purple Rain became one of Prince’s signature songs, widely played in concert for much of his ca- reer. The album also included the hits “When Doves Cry,” “Let’s Go Crazy,” “Take Me with U,” and “I Would Die 4 U.” Prince followed up the Purple Rain album with more successful albums and singles, although he had less positive results with his next movie Under the Cherry Moon. Following the peak of his popularity in the 1980s, Prince continued to enjoy success with music recordings and live performances. In his personal life, Prince was romantically connected with celebrities Sheila Escovedo (Sheila E), Apollonia Kotero, and Denise “Vanity” Matthews. Prince was married twice, with both relationships ending in divorce. He apparently had only one child, Boy Gregory, who was born in 1996 with Pfeiffer syndrome, a rare genetic disorder, and died a week after his birth. Death Prince died at his home in suburban Minneapolis of an accidental opioid overdose on April 21, 2016. He was 57. A few days prior to Prince’s death, his doctor had prescribed an opioid painkiller. Friends had suggested that Prince became addicted to painkillers after sustaining injuries over the years while performing live. Speculation was that Prince thought he was taking Vicodin to manage pain but had unknowingly taken counterfeit pills laced with fentanyl, and that drug caused his death. Police were unable to determine who provided the late mu- sician the illegal pills. Probate On April 26, 2016, five days after Prince’s death, his sister Tyka filed a petition in Carver County, Minnesota, asking the probate court to appoint Bremer Trust special administrator of Prince’s estate. In her petition, Tyka asserted: LAGOS WEALTH ADVISORS Advisor’s Bulletin – February 2021 Page 3 Prince left no last will, and Prince’s closest heirs were his sister and five living half-siblings—John Nelson, Norrine Nelson, Sharon Nelson, Al- fred Jackson, and Omar Baker. Tyka asked the court to appoint Bremer Trust as a special administrator in charge of the estate, as Prince’s valua- ble business assets needed active management. Under Minnesota law, when a person dies without a will (intestate), family inherits the decedent’s property in the following order: If you die with: Here’s what happens: · Children but no spouse · Children inherit everything · Spouse but no descendants · Spouse inherits everything · Spouse and descendants from you and that · Spouse inherits everything spouse, and the spouse has no other descendants · Spouse and descendants from you and that · Spouse inherits the first $225,000 of your inter- spouse, and the spouse has descendants from an- state property, plus half of the balance other relationship · Descendants inherit everything else · Spouse and descendants from you and someone · Spouse inherits the first $225,000 of your inter- other than that spouse state property, plus half of the balance · Descendants inherit everything else · Parents but no spouse or descendants · Parents inherit everything · Siblings but no spouse, descendants, or parents · Siblings inherit everything The court ordered Bremer Trust to act as special administrator until a general personal representative of Prince’s estate was named. COMPETING CLAIMS OF KINSHIP Shortly after the probate proceeding began, many people claiming to be Prince’s heirs surfaced, with some inter- vening in the probate proceeding. Here are a few examples. · According to newspaper reports, as many as 700 people began the process of checking whether they might be another half-sibling of the late singer. · Duane Nelson Sr., who many believed to be Prince’s brother during his lifetime, predeceased the singer. Bri- anna Nelson is Duane’s daughter, and Victoria Nelson, a minor, is the daughter of Duane’s son, the late Duane Nelson Jr., who died in 2006. If Duane was truly Prince’s brother, Brianna and Victoria would likely have stood in line to divide a sibling’s share of Prince’s estate. When it seemed likely that there was no close genetic link between Duane and Prince, Brianna and Victoria went on to argue that since Prince’s father treated Duane like a son during Duane’s lifetime, then Duane and Prince should be considered brothers regardless. LAGOS WEALTH ADVISORS Advisor’s Bulletin – February 2021 Page 4 · Corey Simmons claimed that he was also Duane Nelson’s son, born outside of marriage as a result Duane’s relationship with Carolyn Simmons. · Carlin Q. Williams claimed a more direct link, alleging he was the son of Prince, with Marsha Henson. If that claim was validated, he stood to inherit Prince’s entire estate under Minnesota law. · Others claiming to be valid heirs also filed papers in the probate proceeding: All claims have been found by the probate court to be without merit—at least so far. Based on genetic testing, the court determined that Duane Nelson Sr. was not, in fact, Prince’s brother. It also found that Carlin Q. Williams was not Prince’s son. To date, the court has only recognized the siblings originally listed in Tyka’s probate petition as Prince’s intestate heirs. CLAIMS AGAINST THE ESTATE Many people and organizations filed claims against Prince’s estate. Here are some examples. · Rodney Dixon filed a petition claiming that he was the rightful owner of Prince’s intellectual property due to a predeath transfer: The court ultimately rejected his claims, deciding they were frivolous. Dixon was barred from taking any further part in the probate proceeding. · Mixed Blood Theatre filed a claim against the estate, alleging financial losses due to the special administrator’s cancellation of the fortieth anniversary gala.