In the world of music, Prince is known as a once-in-a-generation talent; in the world of estate planning, he is known as the provocateur of Minnesota’s most complicated probate court case. The brilliant artist who died in 2016 did so without a will leaving an estimated $100 to $300 million in assets to be distributed by the courts. Naturally, things got—and continue to be—ugly.
Prince’s estate remains unresolved and court costs are mounting. A 2019 probate document shows $1.5 million in fees paid to the bank administering the estate. Likewise, $2 million was paid to an L.A.-based entertainment consultant and $3.8 million went to the administering bank’s law firm. Besides, the estate paid $343,000 in attorney bills while the heirs, themselves, paid hundreds of thousands in personal lawyer fees.
The saga of Prince’s estate is not over; the mess continues to unfold but the details are not important for the present article. What matters is the fact that what happened to Prince happens to regular people all the time. The scale is smaller, sure, but the money, time, and energy loss are just as meaningful.
Common Oversights That Lead to Probate:
1. Thinking a Will is All You Need
If your goal is to avoid probate, you’ll need more than just a will. A common misconception abides that a will is a document designed to help a person skirt probate when, in fact, it is a set of instructions for how you want your probate to go.
A will is a mighty estate planning tool but it is not the only one and, in many cases, it is not the best one. To make sure your estate does not end up in probate, you need a trust, not a will.
2. Failing to Fund Your Trust
A trust is a legal vehicle by which you ensure no assets remain in your name when you die. No assets mean no probate but only if the trust is properly funded. This refers to the process by which assets are titled in the name of the trust instead of in that of the deceased thereby placing them beyond the reach of the courts.
While it may seem hard to imagine a person setting up a trust but failing to put anything in it, that very thing happened to none other than Michael Jackson and the results were devastating.
Funding a trust is not hard but requires consultation with an experienced estate planning attorney—don’t worry, though, taking this step saves you money and hardship in the long term.
3. Misunderstanding the Limits of your Trust
There are two principle types of trusts: revocable and irrevocable. We won’t go into detail about both types of trusts but it must be understood that only an irrevocable trust protects you from the potentially horrific costs of assisted living or long-term care.
While this final point isn’t related to avoiding probate court directly, it belongs in the conversation as the central purpose of a well-designed estate plan is to ensure your life’s work is protected and painlessly passed on to loved ones.
Again, an experienced attorney is your best resource for determining which type of trust best suits your needs.
While few things in life are certain—as the present moment has so effectively proven—a robust estate plan ensures that the seamless passing of your assets to the next generation is one of them. By taking the above information into account and working with experienced advisors, not only can probate be avoided but so too can all the stress often associated with estate planning.