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Why should I worry about estate taxes?

What constitutes a person's estate? It can be made up of many things. Real estate is the thing that most people in Arkansas probably associate with this subject. That makes sense, since the largest single investment most of us ever make in our lives is owning a home.

But an estate can be made up of much, much more. If you have an ownership interest in a business, that is an asset that contributes to your estate. If you have a treasured collection of something, Hummel figurines, stamps or even guns, these things, too, deserve to be counted on the list. Funds in retirement accounts or resulting from insurance policies are assets, as well. And if you want to protect your assets from taxes and for the benefit of your heirs, estate planning is needed.

Viewed in this context it becomes apparent that everyone is likely to have assets that deserve the shelter provided by the tools that an experienced estate planning attorney has at hand. When properly crafted and executed, a plan can serve to reduce what might be taken by the government in the form of taxes after your death.

This is something on display in a big way in the matter of the estate of the amazing musical talent, Prince.

He died in April from opioid overdose. Within a week of his death, legal issues began to surface. His only known full sibling told a court that he died without a will. There's also no indication that he created any kind of trust. Attorneys for the company serving as the temporary administrator of Prince's estate estimate its value at about $250 million and predict the government will look to receive more than $100 million in taxes by Jan. 21.

Exactly how much might have to be paid is something no one is really sure of right now because there is no apparent plan in place. Estate administrators are going to have to hire a team of advisers to do an initial assessment in just a few months to gauge how much might be owed in taxes.

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