Turn off the radio, your iPod, Youtube, Amazon music (does anyone use this really?), Spotify and any other music you may have streaming into your car/office/bedroom right now. Let’s observe a moment of silence and R-E-S-P-E-C-T for the passing of the one and only, fabulously talented, soulful, fierce Ms. Aretha Franklin. The Queen of Soul died last week from pancreatic cancer at 76.
While music lovers the world over mourn the loss of a musical legend, your favorite estate planning attorneys at Norton Basu are reminded of the loss of Prince and the ramifications of his lack of estate planning. Like Prince, Ms. Franklin died intestate – without a will or trust.
What’s the big deal, you may ask? Under Michigan law, her estate will be distributed to her children, which is what she most likely would have wanted. Ah, but just hold on there, estate planning grasshoppers. The probate process is public, protracted, and expensive. Heirs generally receive no funds until the process is close to completion. Needless to say, it’s not a pleasant process for your heirs to go through.
In Ms. Franklin’s case, there are other issues involved. There are reports that her estate is worth around $80M. This puts her estate above the federal estate tax exemption amount of $11.180M per person that can be passed to heirs free of estate tax. Any amount above the exemption amount is subject to a 40% estate tax. Much of this tax burden could have been avoided with sophisticated estate planning tools.
Ms. Franklin was known to be very private about her financial affairs. With the filing of a probate case, the chances of spurious claims against her estate increase dramatically. (Again, look at what happened with the Prince estate.)
A well-crafted estate plan would have addressed the issues of managing an estate tax burden, maintaining privacy, and the ability to provide money to heirs quickly. Unfortunately, despite being music royalty and surrounded by a court of experienced advisors, we seem to have a pattern of the Kings, Queens, and Princes of music failing to create an estate plan.
Don’t let this happen to your heirs and your legacy. Have just a little bit of R-E-S-P-E-C-T for your estate plan and you don’t have to worry about anyone doing your estate wrong when you’re gone.