In her long and illustrious career, Aretha Franklin hit many milestones: first female artist inducted into the Rock and Roll Hall of Fame, winner of 18 Grammys and a host of chart-topping albums and singles. When she passed away on August 16, 2018, she was added to the long list of celebrities who failed to leave an estate plan. With an estate estimated to be worth tens of millions of dollars, it’s difficult to understand why she did not at least have a simple Will drawn up. This failure may expose Aretha Franklin’s estate and her family to a number of problems.
Intestacy – dying without a Will – can lead to disagreements over who will inherit and how estate assets will be distributed. Disputes can be fierce, leading to family feuds and lengthy court battles. However, under Michigan intestacy law, Ms. Franklin’s estate likely will be split evenly between her four sons.
Thus far, Ms. Franklin’s sons appear to be working together to settle her estate. A court filing in Michigan lists the sons as interested parties. The document also asked that Aretha Franklin’s niece, Sabrina Owens, be appointed the estate’s personal representative. Hopefully, the current spirit of cooperation between the sons and Ms. Owens will continue until the estate is settled.
By all reports, and despite being a popular entertainer, Ms. Franklin tended to keep her personal life private. This is all about to change.
Had Ms. Franklin left a Will, it would have been submitted to the probate court and become public record. However, trusts usually do not become public record. In fact, that’s one of the advantages of adding at least a revocable living trust to an estate plan. Establishing a trust would have better protected the privacy of Ms. Franklin and her heirs.
Fortunately, tax reform raised the federal estate and gift tax limit to a little over $11,000,000. It’s too early to tell exactly how much Aretha Franklin’s estate will be worth after all debts have been paid. If it is over the tax limit, the estate may receive a tax bill for about 40% of the estate’s value in excess.
This is another area where trusts might have helped. Proper estate and tax planning could have put more money into the pockets of Ms. Franklin’s heirs instead of IRS coffers.
It appears that Ms. Franklin retained ownership and copyrights to much of her extensive catalog of music. Her estate and heirs could reap the benefits of her work for years to come. The question is: how will her estate handle her future earnings?
Special assets like Aretha Franklin’s catalog are often difficult to value. However, at some point an appraisal will be made in order to finalize the probate proceeding.
Even a simple Will could have prevented the potential disputes and disagreements facing Aretha Franklin’s estate. Better yet, establishing one or more trusts potentially would have minimized her estate’s tax burden, passed assets privately and quickly to her heirs, and prevented family disputes.