Steal This Startup Idea: Settling Baby Boomer’s Estates

I’m kicking off a new series called Steal This Startup Idea. The format is simple: I pitch my readers on a startup idea that I’ve researched, but decided not to pursue. But don’t let my lack of interest deter you. I discard most of the ideas I think of for fairly mundane reasons. Those reasons probably don’t even apply to you. So read on to see whether this is an idea you want to steal!

Steal This Startup Idea: The Problem

Settling a loved one’s estate is emotional, expensive, and time consuming. But as my mother-in-law likes to say, many of us will have to suck it up buttercup. Baby boomers are aging, and the US population is greying:

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As the US population gets older, yearly mortality will rise substantially between now and the early/mid 2040s:

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The baby boomers have amassed a staggering $35 trillion dollars of wealth. Unlike their parents, baby boomers have already started giving away their wealth so that they can see people enjoying it before they pass away.

Estate Distribution Costs

It costs on average 3-8% of an estate to complete the distribution process. [source] With a median cost to settle an estate of 5.5%, settling the estates of the baby boomer generation is a $1.9 trillion dollar opportunity, or $65B/yr for 30 years. 

Thinking about this from a bottoms-up perspective, the average estate in the US is worth between $50-250k. That means that most estates will cost executors between $2,750 and $13,750 to settle. Executors spend most of that money on lawyers and CPAs who do routine paperwork on behalf of the executor.

An Example of What Can Go Wrong

When my grandfather passed away, it took my father 2 years and $50,000 more than expected to settle his estate. The process was byzantine and frustrating in a hundred ways.

At one point, my dad called a bank to become the custodian of a bank account. The bank wouldn’t accept the death certificate as authentic. They bank’s customer support team asked my father to provide additional evidence that my grandfather had passed away. My father spent weeks trying convince a bank that my grandfather deceased at the same time as he was grieving his loss.

The whole process was like a long cruel joke and my dad was visibly stressed out for most of it.

Steal This Startup Idea: Solution

The ideal solution for everyone involved would be for the elderly to actually go through their estate documents while they are still alive and set everything straight. That would involve mundane tasks like tracking down old bank accounts, resetting passwords, and clearly documenting who they want to inherit specific assets. It would also involve tense family discussions. The best case scenario would be to get all the inheritors together to review and notarize the allocations prior to a person’s passing.

For obvious reasons, almost nobody does this. Although some elderly or sick people do spend the time to help clean things up a bit, there just isn’t a lot of motivation to do all that unpleasant work. Plus, seriously contemplating your own demise is sure to make even seasoned stoics depressed.

If these factors weren’t present, the optimal solution would be to build a product for elderly people to get their affairs in order before they pass away.

But that’s off the table because thinking about death is unpleasant.

That’s not entirely bad from a product perspective. Executing an estate is the very definition of a high priority, unpleasant task. Most people are willing to spend substantial amounts of money for help. So you have have a discovery channel, a customer, and a problem.

I think there would be two distinct customer groups and product development phases to address this market.

How to Steal This Startup Idea Phase 1: Automation Tools for Probate Law Firms

There are ~70,000 probate lawyers in the US and some indeterminate number of firms that employ them. [source] Although you need a lawyer for some tasks during the estate settling process, paralegals do most of the heavy lifting. Much of what they do is not just time consuming and difficult to get right, it’s repetitive and imminently automate-able. 

For instance, when a person dies, one of the formal steps required of the executor is to send a physical piece of mail to important agencies and organizations like banks, the Social Security Administration, etc. The process of drafting the letters is formulaic. You need to include pertinent details like the deceased person’s name, date of death, and address. You must then look up the relevant addresses of the entities you need to mail (Discover, First National Bank, Chase). Then you need to actually mail merge that data together, print, address, and mail those letters. 

With a list of assets and details about the deceased, a program could do most of that work faster and more accurately than a human and a business could afford to own, integrate, and use a robot to do the physical work. [example] 

Depending on the underlying APIs, software might be able to do this task automatically.

How to Steal This Startup Idea Phase 2: Platform to Settle Estates for Executors

After building enough tools for the #1 customer segment (probate law firms), you might have something that resembles Clear Estate’s product. 

At this point, you could compete on cost, service, language, advertising acumen, and location. Settling an estate will never be 100% automated, so you would need to employ paralegal employees from day 1. But you could figure out ways to make those humans many, many times more efficient through a combination of only accepting certain kinds of estates that are more automate-able. 

What’s Next? 

If you got this far, you should definitely steal my idea. But take heed, traveler! Here are the gotchas and challenges I’ve already identified.

Why I’m Not Building It

At this point, you might say, “George, if this is such a great idea, why aren’t you building it?” The answer is that I have no competitive advantage in legal tech. I don’t have a JD and I’m not a software engineer, so I don’t bring much to the founding team for this idea.

Beyond my own lack of competitive advantage, there are also the inevitable warts with the customers and market. I’ve summarized the two biggest problems below.  

Probate Lawyers Aren’t Incentivized

I spoke to a couple of probate lawyers while researching this idea. Their industry is not very dynamic or competitive. The services they offer are pretty standard and people keep dying. The lawyers running probate firms don’t want to innovate. Many get paid by the hour. For these lawyers, a better solution is actually worse for their business.

And then there’s the general trend among lawyers to view partial solutions as more than partially useless.

There Are Legal Limits to Who Can Run Probate Firms

This restriction varies by state, but most states in the US restrict who can run a legal firm. If you don’t possess a precious JD, you may not be allowed to own or be a partial owner in a legal firm. This rules out the idea of finding a lawyer and making them your cofounder. There are probably ways to engineer around this problem, but it sounds like it’s fraught.

Someone Should Steal This Startup Idea

In summary, I think the idea is reasonably solid and that someone should round out the customer development process I started and call the idea their own.

If you read this whole thing, you should check out my predictions for home prices in 2023.

Happy overthinking!