The marathon resolution of Prince's estate appears to be nearing its last mile.
Prince estate disputes near an end as hearing in February looms for distribution of assets
Other hurdles may arise, but the estate and IRS settled on a final valuation of the superstar's assets.
December 22, 2021 at 8:05PM
The administrators of the late musician's estate recently settled a complicated dispute with the Internal Revenue Service over the value of Prince's assets. The precise value was undisclosed, although it could exceed $100 million.
Meanwhile, the Carver County probate court is set in February to begin discussing a "final distribution" of Prince's assets among his heirs and beneficiaries.
Prince died of a fentanyl overdose in April 2016 without a 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.
The estate will be almost evenly divided between a well-funded New York music company — Primary Wave — and the three oldest of the music icon's six heirs or their families.
Primary Wave bought out all or most of the interests of Prince's three youngest siblings, one of whom died in August 2019. Three older siblings — one of whom died in September — rejected offers from Primary Wave.
Comerica Bank & Trust, the administrator of Prince's estate, and the IRS settled their differences over the value of Prince's estate, according to a late November filing in U.S. Tax Court. The agreement must still be approved by the Carver County probate court.
Terms of the tax settlement were not disclosed. Attorneys for Comerica declined to comment.
A separate tax dispute between Prince's estate and the state of Minnesota does not yet appear to be resolved.
Last year, the IRS determined Prince's realm is worth $163.2 million — about twice as much as Comerica's $82.3 million valuation.
Comerica's appraisal was so low that the IRS slapped a $6.4 million "accuracy-related penalty" on the estate.
Comerica in turn sued the IRS in U.S. Tax Court, saying the IRS' calculations were riddled with errors. With the settlement, a tax trial set for March in St. Paul has been canceled.
Instead, a U.S. Tax Court judge ordered Prince's estate and the IRS to file a status report on the case in late February.
The IRS and Comerica last summer agreed on the value of Prince's real estate at around $33 million. Then, they turned to the trickier task of valuing intangible assets — such as rights to Prince's music.
The full IRS settlement likely prompted the probate court to schedule a February hearing on the "final distribution of the [Prince] estate," said Michael Smith, an estate planning attorney at Larkin Hoffman in Minneapolis who is not involved in the case. "With the settlement, you now know how much cash is going out."
Still, a court-approved final distribution could take months, not weeks. Indeed, no actual distribution plan has been filed in Prince's probate case.
"It sounds like they might be getting together [at the February hearing] just to talk about the process," Smith said. "How do we wrap this up?"
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