North Carolina residents are likely aware that Prince was one of many celebrity deaths in 2016. However, they may not be aware that federal and state estate taxes will reduce his $200 million estate to roughly $88 million. This is because his estate was subject to a 40 percent federal tax as well as a 16 percent Minnesota state tax. The large tax bill was the result of little estate planning on Prince's part before his death.
Lessons Prince taught about estate planning
Planning to avoid estate taxes
North Carolina residents who have estates worth more than the federal exemption may have estate taxes assessed at a rate of 40 percent after they die. There are several strategies that people can use to make certain that their money goes to the people and causes that they want to support rather than simply to the government.
Using an AB trust to reduce estate tax
Married couples in North Carolina might want to know about the possible tax benefits they could be eligible for, and an AB trust is one tool that a couple may wish to utilize. Whether one has a large or small estate, anyone who has property subject to an estate tax may need an AB trust.
Understanding powers of attorney to spot abuse
Thanks to advances in medical and pharmaceutical technology, people are living longer. Sadly, not everyone gets to enjoy a long life free from disease, injury or mental deficiencies. Preparing for this eventuality often includes the execution of powers of attorney for finances and healthcare.
Celebrity estate planning mistakes to learn from
Most North Carolina residents do not have as much money as late celebrities like Prince, Whitney Houston or Heath Ledger. However, everyone can take a lesson from the estate planning mistakes that these stars have made. While celebrity estate planning mistakes can lead to multi-million dollar losses, they are still the same kinds of mistakes that non-celebrities make on a smaller scale.
