It was a sad day for many when the aptly named “Queen of Soul”, Aretha Franklin, passed away at the age of 76 to pancreatic cancer on August 16th. And though her body has been laid to rest with a funeral service to remember, the singer’s family is in for a long, hard road ahead of them as Franklin’s estate – totaling an estimated $80 million – was reportedly left without a will.
While Franklin’s lack of an estate plan is by no means an anomaly amongst similar celebrities – prominent figures like Prince and James Brown also failing to have their affairs in order before their death – for the singer’s heirs, this could mean long, and very public disputes over who gets what, as well as costly estate taxes that could have potentially been avoided, or at least reduced.
“I was after her for a number of years to do a trust,” Franklin’s attorney, Don Wilson, told the Detroit Free Press. “It would have expedited things and kept them out of probate, and kept things private.” But as the Queen of Soul never did, Franklin’s four sons have all filed as interested parties in receiving shares of her estate, while her niece has also requested to be listed as the estate’s executor.
How will Franklin’s assets be divided with no will or estate plan?
“She’s a Michigan resident, so Michigan laws of heirship would dictate where everything would flow, meaning who would inherit her assets,” answers Stuart Kohn, Levenfeld Pearlstein’s trusts and estates attorney. “Because she had no spouse, her children would inherit her assets, and because she had made no estate plan for them, they would inherit those assets outright rather than in trust.”
But with no tax planning, however, this can create problems.
“The federal estate tax exemption is $11.18 million per person, so assuming she didn’t use any of her exemption during her lifetime by making taxable gifts, if her estate is valued in excess of $11.18 million, there’s going to be estate tax and that estate tax is taxed at a flat 40% rate,” Kohn reasons. “There is no estate tax in Michigan, so everything over the $11.18 million is subject to estate tax at 40%, and the tax is due 9 months after she passed away. So, without planning, the estate is going to have to come up with that money and pay that tax.”
As for why Franklin didn’t have a will in the first place?
“I assume that she was getting that advice and she just didn’t take it,” says Jeffrey Eisen, a trusts and estates attorney for Mitchell Silberberg & Knupp. “She just didn’t want to deal with it. […] Maybe she was superstitious about it and thought that it was a bad sign. Some people think it’s like signing their own death warrant.”
But if Franklin’s story has shown anything, it’s that the opposite is true. Having your affairs in order, regardless of age, is just smart no matter how you look at it – helping to limit stress on your loved ones through an already hard time.
Don’t have a will or plan in order? Talk to your estate planning attorney to set things in motion right away. And if you are in California and need a referral, contact us for who we recommend.
And Aretha Franklin? You will be missed.
