By Agent Randy E. Hoffman (08/07/2016) CADOI#0H51968
The federal estate tax is 40% on anything above $5.45 million of assets. If the PRINCE estate was worth $300 million, the rough estimate is $120 million tax bill to the feds. The state of Minnesota estate tax is around 13% so the PRINCE estate at his death owes roughly $150 million in taxes which are collected 9 months after death by the IRS. Now, the absurdity is PRINCE not only DID NOT have a will but no TRUSTS. TRUSTS protect against not only taxation but specify who gets what at the death of the deceased’s assets.
A SPECIAL TRUST for life insurance is called the (ILIT) – IRREVOCABLE LIFE INSURANCE TRUST. This is a method to place a life insurance policy inside a trust to protect it from taxation for the express purpose of paying the estate taxes due at death WITHOUT USING THE DECEASED’S ASSETS thereby keeping the wealth in the family.
So, if the PRINCE financial Advisors would have done their job, PRINCE would have owned a $150 million life insurance policy that would have been placed in an (ILIT). He could have easily financed the premiums for the policy with his residual income that his assets were creating.
The reward? ALL of his hard earned wealth would have not been touched and stayed in his beneficiary’s control. In addition to the above estate taxes due, his estate also loses money from the inevitable probate costs that the court will charge to decide who gets what. Attorney fees will joyfully eat up millions. Again, ALL OF THIS COULD HAVE BEEN PREVENTED BY PROPER PLANNING. (Always get credible legal advice from a respected attorney).