Lessons in Estate Planning from Aretha Franklin
Aretha Franklin passed away in August 2018 with an estate estimated at $80 million. At the time, it was believed she died intestate, meaning she had no will. When a person passes away intestate, assets are distributed according to state law. Ms. Franklin was a resident of Michigan, where the laws of intestacy mandate that a decedent’s assets are distributed equally among surviving children when the decedent does not have a surviving spouse (Ms. Franklin was twice-divorced).
Ms. Franklin has four grown sons, each of whom stood to receive 25% of what remained of the estate after expenses, debts, back taxes, and federal estate taxes. Given that there is a 40% federal estate tax on assets over $11.8 million, if the estate is indeed worth $80 million, the IRS stands to receive $27.5 million. (On the “bright” side, Michigan does not impose its own estate taxes.) In addition, the estates of the grown children who inherit her assets could also be taxed when they pass away.
The Importance of Proper Planning
This situation, while hardly ideal, has been upended by the discovery in May of three handwritten wills that could dramatically alter the administration of the estate and change each son’s inheritance. Two wills, dating from 2010, were found in a locked cabinet in Ms. Franklin’s suburban Detroit home, while a third will, from 2014, was discovered in a spiral notebook left under a couch cushion. They have been submitted to a probate judge to determine whether they qualify as valid wills.
This development has already created conflicts among Ms. Franklin’s four sons. Two of them support the most recent will, one opposes it, and the oldest son, Clarence, has not expressed an opinion. Clarence has special needs and resides in a group home. He stands to inherit significantly less under the terms of the 2014 will than he would have in the earlier wills.
Simply put, the situation is a mess, one that could have been avoided through proper planning. How it will all turn out is anyone’s guess at this point, but we can learn some important planning lessons based on what we already know.
Key Lessons in Estate Planning
- Without a will, your assets will be distributed according to state law. You will have no say in “who gets what,” let alone when and how your heirs will receive their individual inheritance.
- If you have a will and other planning documents, tell someone you trust about the existence of the documents and where they can be found. Imagine the surprise and confusion Ms. Franklin’s heirs and advisors felt upon discovering, eight months after her passing, that there was indeed a will.
- A will does not avoid probate. If you want your financial and personal affairs to remain private, you should have both a will and a trust. A properly designed revocable living trust, for example, allows you to avoid probate, choose when and how your heirs will receive their inheritances, name a person of your own choosing to administer the trust and ensure your wishes are carried out, and expedite the dispersal of estate assets to beneficiaries.
- If you have a loved one with disabilities, special needs planning is essential to ensure he or she receives the necessary care after you’re gone. Ms. Franklin’s final will stipulates that her other sons were to check on Clarence once a week and “oversee his needs.” Unfortunately, her handwriting in that part of the will is virtually illegible, so it’s difficult to gauge what her wishes were for Clarence’s care.
- While most of us don’t have to worry about federal estate taxes, we should address other threats to our assets: creditors, lawsuits, divorce and remarriage, the high cost of long-term care, and more. Proper planning can protect assets against these and other threats.
Aretha Franklin’s “Respect” is one of the greatest soul tracks of all time. Hopefully, you will take the lessons we have mentioned to heart and do some estate P-L-A-N-N-I-N-G.
Get Experienced Estate Planning Assistance
Too many adults today avoid writing a will, even though it’s one of the most critical things you can do for your loved one. Drafting a will and an estate plan is not something you should do absent of legal counsel. Trying to craft a legal document that accomplishes everything you want can seem daunting without assistance. If you’re concerned about drafting a will, the estate planning lawyers with The Law Offices of Clifford M. Cohen can provide the guidance you need. The estate planning process is intricate, and we are here to serve as your counselors for life as we guide you through every step of the way.
With more than 35 years of experience, Mr. Cohen is a passionate attorney who is dedicated to not only the efficacy of your estate plan but also your well-being. We create genuine relationships with every concerned individual who welcomes our services to ensure that their best interests and loved ones are protected. Allow us to do the same for you. Contact us today at 202-895-2799 for a free case evaluation.