Aretha Franklin: Following in Prince’s Footsteps to Pay Millions in Death Taxes
By
Ethan R. Okura
A little over two years ago I wrote about Prince, the music recording legend, and how he passed away without a will. I detailed some of the problems that his estate would face—and is still facing to this day—on account of not adequately preparing. As of April, 2018, Prince’s six heirs had not received one red cent, while the bank acting as executor of the estate and its team of lawyers had already collected $5.9 million in fees and expenses, and had requested at least an additional $2.9 million more be approved by the court. Considering that court documents estimate Prince’s estate may have been worth approximately $200 million, and about half of that will ultimately go to the IRS and the State of Minnesota for estate taxes, there may be very little left for each heir when all is said and done.
Well, history repeated itself last month as the Queen of Soul, Aretha Franklin, joined the ‘Chain of Fools’ and also passed away without a will or a trust. Aretha Franklin’s estate has an estimated value of $80 million. She had four sons who are named as potential beneficiaries of her estate in the documents filed in a Michigan probate court. They can ‘Say a Little Prayer’ that there won’t be any legal battles as there have been with Prince’s estate. Nevertheless, her estate will pay to the IRS taxes of about 40% of the amount over the $11.8 million in estate tax exemption available in 2018—an estimated $27.5 million in addition to court and legal fees. If I were her, I’d be ‘Rolling in the Deep’ having to pay such a large sum in taxes unnecessarily simply because of poor planning.
Aretha Franklin was very private about her financial affairs. I imagine that if she had known that she was about to pass away as a ‘Natural Woman’, and that her finances would all become a matter of public record in probate court, and in addition, that her estate would pay about $34 million in taxes, that there ‘Ain’t No Way’ she would have continued to ‘Rock Steady’ without doing appropriate estate planning. This is especially so because one of her heirs, Clarence, has special needs. One of her lawyers even tried to get her to create a will and a trust, but she never followed through.
Now that Prince’s and Aretha’s heirs and executors are trying to build a probate ‘Bridge Over Troubled Water’ to settle their estates, hopefully the heirs will still end up with a decent inheritance, and preserve the ‘R-E-S-P-E-C-T’ that these famed musicians rightfully earned during their esteemed careers.
If you also follow in their footsteps, it’s possible that your intended beneficiaries might not get the inheritance that you wanted to leave them; there can be long delays before your heirs receive anything; fights might break out among your family members; and even if you don’t have enough assets to incur an estate tax, your financial information will all become publicly available. If you have a child with special needs (or who develops disabilities later in life), she or he may end up losing government benefits she or he could otherwise qualify for when inheriting assets directly from your estate instead of protected in a special needs trust.
A 2017 study showed that 60% of adults don’t even have a will or a living trust. This figure includes 64% of Generation X, and 42% of Baby Boomers! When asked why they hadn’t even done the basics, the most common answer was, “I haven’t gotten around to it yet.” This data is on par with what we see among new clients coming to our law firm, Okura & Associates Estate Planning Attorneys. If you have been putting it off, don’t become one of these statistics. See an estate planning lawyer right away to get the process started.
© OKURA & ASSOCIATES, 2018