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VanNess & VanNess, P.A.
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No matter how much Florida residents admired Prince, the IRS likely admires him even more. This is because his estate will pay a federal estate tax of 40 percent on an estate worth $200 million. That is on top of a 16 percent Minnesota estate tax, and the combined tax bills will reduce the value of his estate to about $88 million.

However, there may have been ways to reduce the amount of estate tax that the singer owed. For instance, he could have made direct contributions to charities either while he was alive or at the time of his death. This could have been done through a charitable lead trust or through the creation of a foundation that Prince could have managed during his lifetime.

If he had formed an LLC or a corporation and placed his assets in it, a small stake in those entities could then have been transferred to a trust designed for a specific beneficiary. The value of minority stakes in a non-publicly traded entity are discounted for gift and estate tax purposes. While these discounts may be eliminated in the future, they could have reduced the singer's tax burden at the time of his death.

Creating a trust, making charitable contributions or other estate planning tools may help an individual reduce his or her estate tax burden. This may make it possible for beneficiaries to receive a larger share of their inheritance. A trust may be preferable over a will because assets flow from a trust to the beneficiary without first going through probate. Trusts may also be preferable to wills because they are not part of the public record, which may allow a decedent's family members to maintain their privacy.

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VanNess & VanNess, P.A.