Years after their deaths in 2016, Prince and David Bowie have drawn numerous comparisons from admirers. They both had edgy musical styles that captivated millions of people. They both created numerous hits over several decades. They both courted controversy. And they both amassed hundreds of millions of dollars over the course of their star-studded careers.
As a result of this wealth, they had fairly complicated estates, which they left behind when they died: and the similarities end here. Where one took care of his own estate planning needs, the other left disorder. Disorder that remains in place years after his death. And regardless of whether you liked one or the other (or either of them), there are two very important points to understand:
- Estate planning is important for EVERYONE
- Estate planning doesn’t happen by itself, even if you’re insanely rich
If you google either “David Bowie” or “Prince” AND “estate planning,” you’ll get some pretty interesting results. Let’s start with the one who did it right—David Bowie.
When you first look at David Bowie and estate planning, you’ll see that he was the first person to come up with what is known as a ‘celebrity bond.’ In 1997, David Bowie sold $55 million of bonds to Prudential Insurance Company of America. In exchange, Prudential received a higher interest rate than what was available through US Treasuries at the time. And payment on the bonds was guaranteed by the royalties from David Bowie’s work on all songs recorded before 1990. Ten years later, when the rights to his royalties reverted back to him, David Bowie was able to pay off the bonds and ensure his family’s financial stability. Not bad for someone who flirted with bankruptcy in the 1970s.
While this is very interesting, it’s neither practical for the vast majority of people, nor is it relevant. What is relevant, though, is the fact that his estate plan was nothing special, nothing controversial. A couple of trusts, and a 20-page will outlining specific bequeaths to his wife, Iman, his children, and a couple of close employees—David’s long time personal assistant, and his son’s former nanny. Strikingly similar to the estate plan a good financial planner might help a client with.
In contrast, Prince left behind no estate planning documents. No will. No trusts, nothing. He died intestate. Basically, Prince left his $300 million estate to the courts to decide who, out of his family, should get what.
As a result, years later, legal fees have surpassed $10 million, while the family has received nothing. It’s easy to blame the lawyers. After all, when you charge by the hour, you have every incentive to drag things out. And it’s easy to blame the family, who is still spending significant amounts of time bickering over who is entitled to what. And it’s easy to blame the state of Minnesota (Prince died in Chanhassen, an affluent suburb of Minneapolis), for taking so long to figure out the vast morass of Prince’s estate. But the truth is pretty simple: This giant mess is exactly one person’s fault—Prince’s.
Things might have gone a little more smoothly had Prince taken the time to:
- Create a will, telling the entire world who gets what
- Create beneficiary designations for his financial accounts, directing the various financial institutions to send their money to specific people
- Create a trust, had he wanted some of his estate to be directed to certain charitable causes
From news reports, it appears that there were plenty of people that Prince cared about. However, Prince’s estate plan (or lack thereof) reflects an inconsistency between his caring attitude and what’s actually happening to his fortune. It’s a shame, because Prince probably would not have wanted to see:
- Lawyers taking huge chunks of his wealth
- While the government significantly taxes what’s left, and
- His family gets a lot less than what they had hoped
So, if you’re a fan of music, aspire to be more like David Bowie than Prince. When it comes to estate planning, that is.