What could possibly go wrong in this scenario? Prince, multi-millionaire with a 200-million-dollar estate, dies and no trust has been set up prior to his death. As of this past April, none of his heirs have inherited any portion — not even a penny — of his estimated $200 million estate. Without an Estate Plan (a trust is part of an Estate plan package), the process of settling his estate becomes much more complicated. The executor (manager) of his estate can’t divide the money among his six siblings until the IRS and the executor agree on the value of the estate when Prince died.
The only ones who have gotten paid so far are the IRS and state of Minnesota. The executor and its lawyers have already collected $8 million dollars. Without a will, an estate will enter what is called Probate. Probate is the legal process of transferring title of property and assets from the deceased to the beneficiaries. With a valid will in place, all creditors will be paid during the probate process. Then the beneficiaries will then receive the remaining assets. The probate process is lengthy and costly, and all affairs become public records.
The only way to avoid the probate process completely is with a trust. Prince’s estate would have been settled long ago, had he put all his assets into a trust and named his beneficiaries. Since Prince had neither, the executor must first determine which the beneficiaries are, and what the estate assets are. All debts, executors, lawyer and IRS must be paid before the beneficiaries will see any money from their inheritance.