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P-R-O-B-A-T-E, Find Out What It Means To Me

(To the tune of Aretha’s iconic version of “RESPECT”)

♪    P-R-O-B-A-T-E, find out what it means to me   ♪ 

♪   P-R-O-B-A-T-E, take care, TCB  ♪  

♪    Oh! (sock it to me, sock it to me, sock it to me…)   ♪ 

Rest in peace Aretha Franklin, who died last month at the age of 76. What a voice and what a career, both as an artist and a cultural icon. Along with 18 Grammy’s and 20 number-one R&B singles, the Queen of Soul shockingly left behind an estate with no will or trust.

Did you know the “TCB” line in Aretha’s “Respect” stands for Taking Care of Business?

Shockingly, a lot of celebrities don’t take care of their business. It’s been two years and Prince’s estate is still tied up in court. In one of the more bizarre stories, eccentric billionaire Howard Hughes died without a valid will, which became even weirder when people claimed he bequeathed $156 million to a gas station owner who once gave him a ride when his car broke down. Now Aretha’s family begins what is sure to be a long, costly process to settle her financial affairs. And every time, we say the same thing: How could this happen with millions of dollars at stake, not to mention the intellectual property and publishing rights? (Don’t you think there’s a couple of Prince’s relatives chomping at the bit to sell “Little Red Corvette” to Chevrolet?)

Why does it matter?

Without proper documents, a person’s estate is required to go through probate before money can be distributed to heirs. In a nutshell, probate is a process that freezes someone's assets after their death until things can be sorted out by a judge. This means identifying the assets and potential heirs and creditors. Oh, did I mention this gets posted in the local newspaper and gives several months for anyone to come forward to make a claim?

In addition to the time and hassle, probate costs and attorney fees will chew up millions for these pop stars, but even for the average person, probate costs can range "from a few thousand to tens of thousands of dollars", according to Jon Daugharthy, an Estate Planning Attorney in Overland Park.

Other Options?

I'll leave this answer for your attorney, but for some, establishing a trust may avoid the probate process. And if the cost of establishing a trust is a barrier, you may not be thinking long-term enough. According to Daugharthy: 

“A revocable trust (commonly known as a living trust) based estate plan for an average person might run $2,000 to $5,000 to set up, depending on circumstances. However, the lesser expense and relatively more convenient manner of administering a trust instead of maneuvering through the probate process may actually make the trust a better and more cost effective tool in the long run (provided all of your assets are properly transferred to the trust). Regardless, almost everyone should have some type of estate planning instrument in place.”

In other words, avoiding estate planning to save a few bucks today may lead to larger costs for your family down the road.

But it’s not always a financial decision. As we know from years of sitting through meetings with our clients and their estate attorneys, planning for death can be complicated and filled with uncomfortable conversations.

  • “Who will raise the kids?”
  • “Should the child who needs more help receive more inheritance?”
  • “How do we divide our assets amongst a blended family?”  

While no one likes planning for death, the fact remains that no one lives forever. Avoiding hard conversations while living will only force your family into much harder (and often family-dividing) conversations after you die.

Take Care, TCB … Now.

-Greg

PS: Just because you have a will, doesn't mean you'll avoid probate. If you need help, let us know. As part of our planning process, we work alongside our clients and their attorneys when they’re putting together their estate plan.


Greg Dillard

Greg is a co-founder of BridgeQuest Wealth Strategies and a Wealth Advisor. He strives to ensure that clients gain clarity and focus in the financial planning process. Clients appreciate his ability to distill down his in-depth analysis into an understandable game plan.