1. The Obvious Need for Estate Planning
Mr. L. passed away in 1972, leaving behind a will dated November 22, 1968. However, the will was incorrectly formed and contained illegible and incorrect amendments. Despite the existence of the will, a man claiming to be his eldest son contested the inheritance, leading to prolonged legal disputes.
Legal Disputes
The claimant initiated legal action in 1986, challenging the validity of the 1968 will. The case underwent extensive litigation, reaching the Supreme Court of Nigeria. In 1995, the Supreme Court upheld the will, confirming that the estate should be distributed according to Mr. L.’s stated wishes.
Implications
The legal battle spanned over two decades, causing significant emotional and financial strain on the family. The prolonged dispute delayed the distribution of assets and incurred substantial legal fees.
Benefits of a Trust or Foundation
Avoidance of Probate: Establishing a trust could have facilitated the direct transfer of assets to beneficiaries, bypassing the lengthy probate process.
Reduction of Legal Challenges: A well-structured trust or foundation might have minimized ambiguities, reducing the likelihood of disputes from potential claimants.
Privacy Preservation: Trusts and Foundations typically operate privately, shielding estate details from public scrutiny and potential contestation.
This case underscores the importance of comprehensive estate planning. Implementing mechanisms such as trusts or foundations can provide clarity, reduce the potential for disputes, and ensure that an individual’s assets are distributed according to their intentions.
2. The Perfect Case for a Trust or Foundation
Prince, the music star, died intestate (with a contested Will some arguing no Will) despite having an estate worth over $156 million.
His six heirs (half-siblings) fought over the estate for years. The estate was frozen for six years, with courts determining ownership and distribution. The IRS and Minnesota tax authorities argued that the estate was undervalued, leading to a $32 million tax bill. Legal fees and administration costs drained a significant portion of the estate.
The estate was finally divided in 2022, with half going to a music management company and the rest to his heirs.
How a Trust or Foundation Could Have Helped
Avoiding Probate & Legal Battles: A trust or foundation would have immediately passed his assets to beneficiaries without public probate, court delays, or feuds.
A foundation could have provided structured control over his music catalog, business assets, and royalties.
Reducing Tax Liabilities: Charitable structures could have significantly reduced estate taxes, which took a huge bite out of his fortune. A revocable trust or offshore entity could have lowered Minnesota and federal tax exposure.
Protecting Intellectual Property & Business Interests: Prince’s vast music catalog could have been placed into a foundation, ensuring control over licensing and releases, preventing unwanted exploitation. Instead, after his death, different parties fought over music rights, delaying projects.
Ensuring His Legacy & Wishes Were Honoured: A well-drafted trust or foundation could have ensured his fortune was managed according to his values, possibly funding future musicians or causes he supported.
This case is a textbook example of why high-net-worth individuals (HNWIs) and ultra-high-net-worth individuals (UHNWIs) should establish trusts foundations and offshore structures, and well-planned estate strategies. A trust could have avoided six years of delays, saved tens of millions in fees and taxes, and preserved his estate exactly as he would have wanted.
