The news of Prince’s death came as a shock to many. To me, the bigger shock was the announcement that followed days later—Prince apparently died without an estate plan. Shortly after his death, Prince’s sister filed paperwork with the probate courts of Minnesota stating that she believed her brother died without a will. The probate judge entered an order finding that Prince died intestate; therefore, his sister, his surviving half-siblings, and the descendants of his deceased half-brother stand to eventually inherit his multi-million dollar estate—that is, unless the assertions of any one of the many people who have come forward claiming to be sons and daughters of the late musician prove true. If it turns out that Prince had children, even if he never knew them, those children would have a superior claim to his estate than his siblings.
Administration of Prince’s estate is going to be an outrageously expensive and extremely time consuming mess. It will be worse because he left no will, but the fact is, even if Prince had left a will, administration of his estate would still have been an outrageously expensive and extremely time consuming mess. The way the media talks about the situation, you would almost think if Prince had only left a will, everything would have been simple. That couldn’t be further from the truth.
Even with a will, Prince’s estate would have passed through probate court. A will would not have kept Prince’s estate out of probate, and it will not keep your estate out of probate. A will is nothing more than a formal set of instructions to the probate judge who will eventually be assigned to your case. In Arkansas, probate tends to cost around three percent of the value of the estate, it takes no less than six months, and it is very public. You do not want your estate in probate court—so you cannot rely on a will as your primary estate planning document.
Sure, having a will is better than nothing. In a will, Prince could have identified who he wanted to manage his final affairs, he could have clarified which of his many family members he wanted to benefit, he could have disinherited any alleged children he knew about (or didn’t know about), and he could have taken care of charities that were important to him. As it stands now, because he had no will, the judge selected a corporation to manage his estate (for a hefty fee), state statutes will determine who will receive his property (eventually, after lengthy delays), alleged descendants are free to throw around their allegations, and no charity will see a dime.
Yes, things would have gone better if Prince had left a will. But to stay out of probate court, he would have been wise to use a trust instead. Like a will, a trust contains your instructions as to who should manage your final affairs and who should receive your property when you’re gone, but those instructions are followed outside of probate, not in court.
But just knowing the difference between a will and a trust, and even deciding to use a trust in your estate plan, isn’t enough. Another celebrity story provides fair warning—having a trust won’t keep you out of probate court if you don’t use it right. When Michael Jackson died, his mother filed court papers indicating that he had no estate plan, just like Prince; however, a short time later, an attorney produced both a will and a trust that were signed by Michael Jackson before he died. You might assume that, since Michael Jackson had a trust, his estate would not have gone through probate, but it did, and it’s still there. Michael Jackson’s estate wound up in probate because he failed to title any of his assets into the name of his trust, a process called trust funding.
A trust only saves from probate those things that are titled in the name of the trust. For example, your home is not in your trust if you do not execute a deed transferring title to your trust. Your financial accounts are not in your trust if they are not registered in the name of your trust or at least payable on death to your trust. Michael Jackson had a trust, but not one of his assets was titled in the name of that trust before he died, so his estate went to probate.
Don’t let stories you hear in the media confuse you. Having a will is better than nothing, but it does not make things simple, and it does not keep you out of probate court. Even having a trust won’t keep you out of probate court if you don’t use it right. You must fully fund your trust to protect your family and your estate.