Today I want to talk about some high profile cases, just to illustrate what happens when planning isn’t done the right way or you know, maybe there was a just a lapse and somebody elected to adopt the no plan. And so I get two different cases that we want to run by cause I think stories and actual accounts are the best way to illustrate a lot of stuff. And so the first one we want to talk about Joe Robbie stadium issue and the late Joseph Robbie and what happened there. And then we’re also going to take a look at the state of Prince is still ongoing. You have two very different circumstances there and they, they’re great cause they illustrate two different kind of mistakes that can happen in the planning sphere.
And in Joe Robbie’s case, it also involves what could have been done differently in some life insurance aspects of the planning. So anyway, so let’s dive into it today. Excited. So Joe Robbie, for those of you that may not know, he was the founder of the Miami dolphins football team. And in the end, his team in the stadium that Robby built in 1984, the $115 million of his own money had to be sold by the family to sell a huge amount of estate taxes shortly after he died in 1990. So the circumstance there was that, and this is pretty common, by the way, when you deal with businesses, family businesses are, are huge for having issues because a lot of times they’re not very liquid. And so what will happen is there’s a value to that business as there was in the case of the Miami dolphins team in the stadium.
So a lot of times you have all this value, but you don’t have the liquidity to pay the estate taxes. So at the time of this podcast, you know, your state tax rates are around 40% on the high side. And so that’s 40%. So let’s say you had an estate tax bill of $20 million, you know, you’re talking about roughly 8 million at that amount in estate taxes. So just on the 20 million. So in the case of Joe Robbie, you know that the estate was worth well in excess of that. And so, you know, you’re, you’re really talking about a $70 million estate, I think was what the, some sources said, you know, when it was all said and done. So in the case of Joe Robbie, what happened is he actually did some planning. So yesterday we kinda did an overview of what is estate planning. And we talked about the various that you can have.
And, and we touched on, you know, we’re revocable living trusts and having a will in these kinds of things. Well, but Joe Robbie’s estate actually did, or what Joe Robbie did for his estate was he had a revocable trust and then he had a pour over will. And what that is, is that the will would put the assets in the trust in the event of his, his death. And then that trust was going to provide a lifetime support for Joe, Robby spouse. And so that was actually done and put in place. And the problem with that plan is that it was more suitable for your average household. We talked about what is in the state and we talked about who needs planning and you know, in a state is just a bundle of assets, right? And then, but one thing we didn’t get into yesterday was that, you know, you can do planning and you know, a lot of times you think your state might be too small.
Well, if the estate’s too big for a particular plan is, was the case of Joe Robbie, then you’ve got another problem. So what happened is he tried to go with this sort of basic plan with this revocable trust. And what happened was that this money was put into his trust for his wife, Elizabeth and Elizabeth up in decided that she was wanting her lump-sum share all at once rather than to get lifetime income and these kinds of things. And so she did what was interesting in Florida, which is a another topic in and of itself, but it was it was that she demanded her elective share. Okay. And a spouse can do this in the state of Florida. And she did. She said, I want my lump sum. I want 30% of the estate right now. And of course the legal advisors that were all running the estate said that we would really like to postpone that there’s not enough liquidity.
And Elizabeth, the record shows, she said, you know, I want it right now. And so they had no choice but to sell the Miami dolphins team and stadium and what they termed to be fire sale prices. So this is exactly the kind of catastrophe that we want to avoid. And it was really because of inadequate planning. You know, this is in today’s market, you know, if someone wants to have a revocable trust and pour over will done, you know, you’re probably talking between three and $5,000 to get that done. And you can imagine a $70 million estate know it was an estate that warranted some more specific and sophisticated planning. And yet it, in this case, it wasn’t done. And so this is what the result was. So Matt state had been set up, defer the estate taxes until after Elizabeth’s death. Well, when she asked for her 30%, it made those taxes come due and that’s what treated a problem.
Perhaps it wasn’t foreseeable for Joe Robbie to think that she could make that demand, but it’s always available in the state of Florida unless there’s some planning that’s done to prevent that. And one thing would maybe be like a prenuptial agreement or something says that she won’t exercise that, that right. So she did in this case, so there was not enough cash and the bottom line, and the takeaway is that this could have been avoided through some different tax planning strategies. They could have bought life insurance to cover these state taxes. That’s a very common strategy in a way that life insurance is used for estate planning. And if, if, and there could’ve been some other trust structures that would have prevented the taxes from coming due at the time that Joe passed away, given that his wife was still alive at that point.
So anyway, that was one situation. You have another extreme with the estate of prints from my home state of Minnesota and his estate is even larger. They’re not really sure exactly how much it’s worth at this point. And the estate process as I speak, is still going on. Okay. In the state of Minnesota. So they estimate it, you know, around possibly around 200 to $300 million as far as the value in the state of Minnesota still hasn’t been paid its state taxes. Cause in that state there’s a state of state tax as well as well as the federal and you know, the, the, their platoons of lawyers working on it, the, the legal fees are in the 10 million range. They estimated probably more than that as time progressed since that just came out. And so the, you know, the lesson there in Prince’s estate is that if you die without a will, then you’re gonna leave behind confusion.
If you have an average bundle of assets and the average estate, you’d die without a will, then you have a little bit of confusion and it can be stressful for families. If you die without a will and you have a hundred plus million dollar state, what you have is total chaos. So in Prince’s defense, he was only 57 when he passed away, rather suddenly, no one really knows what happened there. And it was confusing because when you don’t have a will, you don’t really know who the designated heirs are. And I know there were a number of number of people that of course, stepped up to the, up to the plate on that to be included. And so it’s, it’s been an ongoing struggle with legal bills racking up and people arguing and consultants getting involved and documents being cranked out and what has been described to be blizzards of documents all up in Carver County, probate court in Minnesota.
So all these things to say that, you know, when you have either an inadequate plan or a no plan plan cause you just hadn’t gotten to it per se, people procrastinate on this stuff and then bad things can happen. And you know, for the average household, you know, you might think, well you know, I don’t have those kinds of situations and you don’t, but you also don’t have teams and lawyers that can work on it. So really you have maybe one or two family members that are going to have to be sorting out the confusion that is there. So it’s still critically important to have, have some proactive planning at whatever level, you know, your bundle of assets your estate is at and in order to avoid, you know, the Joe Robbie scenario or the Prince scenario. And so that’s the takeaway. As always, we want to bring topics that are relevant to you guys in this podcast. We want to unpack the world of state planning and that that means planning for your bundle of assets. And we want to have a lot of stories, so please feel free to submit those with your comments and share and subscribe and, and again, thankful to be with you guys and we will talk to you in the next episode. Thanks.
