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It’s final – Prince’s estate is worth $156.4 million

After nearly six years of legal wrangling, the parties to Prince’s estate have finally agreed on its value: $156.4 million.

That’s well above the $82.3 million valuation by the estate administrator, Comerica Bank & Trust, but not much less than the tax collector’s valuation. The Internal Revenue Service in 2020 valued the estate at $163.2 million.

With an agreement between Comerica and the IRS – with the agreement of Prince’s heirs – the process of distributing the star musician’s wealth could begin in February.

“It’s been six long years,” L. Londell McMillan, attorney for three of Prince’s siblings, said during a Friday hearing in Carver County District Court.

Prince died of a fentanyl overdose in April 2016. He had no will.

Since then, a phalanx of lawyers and consultants have been paid tens of millions of dollars to administer his estate and come up with a plan for its distribution. Two of Prince’s six heir siblings, Alfred Jackson and John R. Nelson, have since died. Two others are in their eighties.

Ultimately, the estate will be almost evenly split between a well-funded New York music company – Primary Wave – and the three oldest of the music icon’s six heirs or their families.

The IRS and Comerica moved into the real estate portion of Prince’s estate last spring. But the more delicate task of valuing intangible assets such as the rights to Prince’s music was not completed until October.

The value of that settlement — $156.4 million — was disclosed Friday in a filing in Carver County probate court.

As part of the settlement, the IRS waived a $6.4 million “accuracy penalty” it imposed on Prince’s estate. The Minnesota Department of Revenue, which agreed to the estate valuation, also waived an accuracy penalty, according to the filing.

Tax collectors will take a bite out of Prince’s fortune which will run into the tens of millions of dollars.

Just over $5 million of Prince’s estate will be exempt from tax under federal law, but thereafter the tax rate is 40%. In Minnesota, the first $3 million is tax exempt; after that, much of Prince’s estate will likely be taxed at 16%.

In mid-2020, Comerica sued the IRS in US tax court, claiming the agency’s calculations of estate value were riddled with errors. A tax trial scheduled for March in St. Paul was canceled due to the settlement.

Comerica, in a court filing on Friday, said that even if the IRS settlement was “fair and reasonable,” he believes it would have “prevailed” in the tax court case. Comerica said he told Prince’s heirs that if lowering estate taxes was their “primary interest,” they should continue to lobby the IRS and, if necessary, take legal action.

“Instead, members of the heir band uniformly communicated to [Comerica] their firm desire that the estate be settled with the tax authorities,” the filing states.

Primary Wave bought out all or most of the interests of Prince’s three youngest siblings, including Jackson, who died in August 2019. Three older siblings – including John Nelson, who died in September – rejected offers from Primary Wave.

Last year, the three older siblings transferred an undisclosed part of their stake to McMillan and Charles Spicer, who represented them in estate proceedings. McMillan is a veteran New York entertainment attorney who worked with Prince for several years. Spicer is a musician and producer from New York.

As complex as Prince’s succession proceedings are, they could be much more convoluted.

Singer Michael Jackson died in 2009 and, seven years later, his estate manager assessed his fortune at $7 million. The IRS weighed in at $1.1 billion before finally lowering its assessment to $482 million.

Last spring, a U.S. Tax Court judge finally settled the case, valuing Jackson’s estate at $111 million.

startribune Gt Itly

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