Virtuoso music artist Prince's death sets off a complicated process to value his estate, as reported by Investment News.
The musical icon's death has also set off a countdown just until the tax man takes a big bite out of Prince's estate. Important parties involved with the situation must determine just how huge Uncle Sam's bite might be. Although, as majority have said, such a task is almost impossible to achieve especially because a superstar is being talked about. I could spark a lengthy feud between the government and the estate. More than half the estate's value could be forfeited in tax so the stakes are indeed high.
The director of estate planning at Annex Wealth Management and has worked for 12 years at the IRS as an estate tax attorney, Richard Behrendt, calls it a "quirky valuation challenge" that is more on the art side than scientific. The complexity and difficulty comes down to placing a value on intangible assets, like the future royalties that the artist may earn from a body of work.
Atlanta-based wealth adviser and board member of the National Association of Estate Planners and Councils, Charlie Douglas, said that you are trying to look at present value of a future income steam. Reportedly, Prince has amassed an astounding fortune worth around $300 million. And since the death of an iconic artist comes the likelihood of ballooning popularity and valuation, the divide between how the Internal Revenue Service and the Prince estate view of the present value of the future royalties could be immense.
"For the artist, whether it's Picasso or Prince, death has an impact on their body of work. It's undeniable," said Mr. Behrendt. "The IRS will factor that in and say his death will blow the royalties off the charts, but his attorneys will say, 'You can't do that.'" He also added that best people will be put on these unique cases.
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