Prince Passed Away in 2016, So Why is His Estate Still in the News?

In April of 2016, Prince passed away in his home, leaving behind a multi-million dollar estate and no Will. In the years since, the complex task of settling his estate has ensued, creating various legal hurdles and lessons to be learned.
Read the Full Story

Prince Passed Away in 2016, So Why is His Estate Still in the News?

In April of 2016, Prince passed away in his home, leaving behind a multi-million dollar estate and no Will. In the years since, the complex task of settling his estate has ensued, creating various legal hurdles and lessons to be learned.

In April of 2016, Prince passed away in his home, leaving behind a multi-million dollar estate and no Will. In the years since, the complex task of settling his estate has ensued, creating various legal hurdles and lessons to be learned. 

As with any estate, determining the values of assets owned by the deceased is one of the first crucial steps that takes place in administering the estate. Whether the estate is worth $1,000 or $100 million, values of all assets at the time of death need to be estimated in order to determine the following: the appropriate probate approach, distribution among heirs, tax strategy, and cost basis for sales of those assets.  Without a clear and accurate approximation of the value of an estate, the administration process can come to a standstill, or worse not even get underway, which was the case in Prince’s estate.  After a six-year legal battle, the remaining heirs of Prince’s fortune (two of whom died during this time) and the IRS came to an agreement on the date of death value of Prince’s estate, at a staggering $156.4M, which was $82M more than originally reported by the estate’s administrator. 


How and Why Would an Estate Be Under-valued by Nearly 50%? 

For larger estates where an estate tax return (IRS Form 706) must be filed, a mere estimate of each estate asset just won’t do, and professional appraisals are often needed. The return is used to report these appraised values to the IRS, and, in some cases, the appropriate state taxing authority.  The purpose of the estate tax return is to provide a snapshot to the IRS (and some states) of what the values of the deceased’s assets held in his or her name were on the exact day that he or she died.  Upon review of the estate tax return, the IRS will carefully review the reported “date of death value” of each asset and determine whether or not they believe it is an accurate estimate. 

Many wealthier individuals own “hard to value” assets such as artwork, intellectual property, and, often most importantly, business interests. In Prince’s case, his assets were made up of hard to value assets like recording interests and music publishing contracts, which can often make it harder for an estate to name a value. These assets require professional appraisals to be done using a methodology that meets the IRS’s standards, known as a “qualified appraisal.” Even when a qualified appraisal is done, there is often significant room to differ as to the valuation assigned to the asset. Fair market value as defined by Internal Revenue Service Publication 561 is “the price that property would sell for on the open market. It is the price that would be agreed on between a willing buyer and a willing seller, with neither being required to act, and both having reasonable knowledge of the relevant facts." This is just one factor out of many in how valuation can be assigned. Additionally, discounts can often be taken on certain assets for lack of marketability and lack of control. The use of these valuation methodologies and discounts is an art form, and qualified appraisals done by a qualified appraiser are an absolute “MUST” for any estate that may require an estate tax return. 

Think about how stock prices of stable public companies fluctuate on a day-to-day basis (and during the course of the business day), and then imagine how wildly dramatic this can be for a private company, not listed on an exchange, with vastly different criteria used to show past, present and future performance. And, what about art? Trying to determine what certain works of art would sell for on the open market can prove even more difficult. 

Prince performs during the halftime show at the Super Bowl XLI football game at Dolphin Stadium in Miami Gardens, Florida, Feb. 4, 2007. (Associated Press / AP Newsroom)

Application to Prince’s Estate 

Now, apply this to the sheer quantity of assets (from the name, likeness, and image, to royalties, to business interests, to real property) that likely comprise Prince’s estate. Given that most of these are likely assets with significant room to deliberate as to the value, it doesn’t seem all that shocking that the heirs of Prince’s estate have been battling it out with the IRS in tax court. While it is uncertain whether the gross undervaluing of these assets was a mere misunderstanding of value or not, either way, this discrepancy has cost the estate millions. Not only has the estate incurred what are likely to be enormous legal fees, but the IRS fined the estate a $6.4 million penalty to be paid out for substantially undervaluing the estate assets. 

Key Takeaways
  • A qualified appraiser who specializes in “hard to value” assets is a must for an estate with non-traditional assets. 
  • The appraiser must conduct a qualified appraisal that meets the criteria outlined by the IRS.
  • Multiple appraisers may be needed for an estate with a variety of assets.
  • Estate planning is a key step in a successful administration. Specifically, naming a qualified executor who can manage the enormity of the estate and the various beneficiaries is helpful to complete the administration. 



1. Martin, K. (2022, January 15). Prince Estate Value set at $156.4m years after his death. Fox Business. Retrieved February 10, 2022, from https://www.foxbusiness.com/lifestyle/prince-estate-value-milllions-minnesota-irs

2.Though IRS Pub 561 deals with assigning values to donated property (i.e. charitable contributions), this “willing buyer / willing seller” methodology is still a key component taken into consideration during a professional appraisal, though future value of an asset as a “going concern” and discounts may also apply depending on the type of asset.

3.NBCUniversal News Group. (2021, January 3). IRS says Prince's estate was undervalued by $80 million. NBCNews.com. Retrieved February 10, 2022, from https://www.nbcnews.com/pop-culture/music/irs-says-prince-s-estate-was-undervalued-80-million-n1252690


Read the Full Story

Prince Passed Away in 2016, So Why is His Estate Still in the News?

In April of 2016, Prince passed away in his home, leaving behind a multi-million dollar estate and no Will. In the years since, the complex task of settling his estate has ensued, creating various legal hurdles and lessons to be learned.
Read the Full Story
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Prince Passed Away in 2016, So Why is His Estate Still in the News?

Trustate Team
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In April of 2016, Prince passed away in his home, leaving behind a multi-million dollar estate and no Will. In the years since, the complex task of settling his estate has ensued, creating various legal hurdles and lessons to be learned. 

As with any estate, determining the values of assets owned by the deceased is one of the first crucial steps that takes place in administering the estate. Whether the estate is worth $1,000 or $100 million, values of all assets at the time of death need to be estimated in order to determine the following: the appropriate probate approach, distribution among heirs, tax strategy, and cost basis for sales of those assets.  Without a clear and accurate approximation of the value of an estate, the administration process can come to a standstill, or worse not even get underway, which was the case in Prince’s estate.  After a six-year legal battle, the remaining heirs of Prince’s fortune (two of whom died during this time) and the IRS came to an agreement on the date of death value of Prince’s estate, at a staggering $156.4M, which was $82M more than originally reported by the estate’s administrator. 


How and Why Would an Estate Be Under-valued by Nearly 50%? 

For larger estates where an estate tax return (IRS Form 706) must be filed, a mere estimate of each estate asset just won’t do, and professional appraisals are often needed. The return is used to report these appraised values to the IRS, and, in some cases, the appropriate state taxing authority.  The purpose of the estate tax return is to provide a snapshot to the IRS (and some states) of what the values of the deceased’s assets held in his or her name were on the exact day that he or she died.  Upon review of the estate tax return, the IRS will carefully review the reported “date of death value” of each asset and determine whether or not they believe it is an accurate estimate. 

Many wealthier individuals own “hard to value” assets such as artwork, intellectual property, and, often most importantly, business interests. In Prince’s case, his assets were made up of hard to value assets like recording interests and music publishing contracts, which can often make it harder for an estate to name a value. These assets require professional appraisals to be done using a methodology that meets the IRS’s standards, known as a “qualified appraisal.” Even when a qualified appraisal is done, there is often significant room to differ as to the valuation assigned to the asset. Fair market value as defined by Internal Revenue Service Publication 561 is “the price that property would sell for on the open market. It is the price that would be agreed on between a willing buyer and a willing seller, with neither being required to act, and both having reasonable knowledge of the relevant facts." This is just one factor out of many in how valuation can be assigned. Additionally, discounts can often be taken on certain assets for lack of marketability and lack of control. The use of these valuation methodologies and discounts is an art form, and qualified appraisals done by a qualified appraiser are an absolute “MUST” for any estate that may require an estate tax return. 

Think about how stock prices of stable public companies fluctuate on a day-to-day basis (and during the course of the business day), and then imagine how wildly dramatic this can be for a private company, not listed on an exchange, with vastly different criteria used to show past, present and future performance. And, what about art? Trying to determine what certain works of art would sell for on the open market can prove even more difficult. 

Prince performs during the halftime show at the Super Bowl XLI football game at Dolphin Stadium in Miami Gardens, Florida, Feb. 4, 2007. (Associated Press / AP Newsroom)

Application to Prince’s Estate 

Now, apply this to the sheer quantity of assets (from the name, likeness, and image, to royalties, to business interests, to real property) that likely comprise Prince’s estate. Given that most of these are likely assets with significant room to deliberate as to the value, it doesn’t seem all that shocking that the heirs of Prince’s estate have been battling it out with the IRS in tax court. While it is uncertain whether the gross undervaluing of these assets was a mere misunderstanding of value or not, either way, this discrepancy has cost the estate millions. Not only has the estate incurred what are likely to be enormous legal fees, but the IRS fined the estate a $6.4 million penalty to be paid out for substantially undervaluing the estate assets. 

Key Takeaways
  • A qualified appraiser who specializes in “hard to value” assets is a must for an estate with non-traditional assets. 
  • The appraiser must conduct a qualified appraisal that meets the criteria outlined by the IRS.
  • Multiple appraisers may be needed for an estate with a variety of assets.
  • Estate planning is a key step in a successful administration. Specifically, naming a qualified executor who can manage the enormity of the estate and the various beneficiaries is helpful to complete the administration. 



1. Martin, K. (2022, January 15). Prince Estate Value set at $156.4m years after his death. Fox Business. Retrieved February 10, 2022, from https://www.foxbusiness.com/lifestyle/prince-estate-value-milllions-minnesota-irs

2.Though IRS Pub 561 deals with assigning values to donated property (i.e. charitable contributions), this “willing buyer / willing seller” methodology is still a key component taken into consideration during a professional appraisal, though future value of an asset as a “going concern” and discounts may also apply depending on the type of asset.

3.NBCUniversal News Group. (2021, January 3). IRS says Prince's estate was undervalued by $80 million. NBCNews.com. Retrieved February 10, 2022, from https://www.nbcnews.com/pop-culture/music/irs-says-prince-s-estate-was-undervalued-80-million-n1252690


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