Aretha Franklin was no doubt one of the greatest singers of our time. With her vast estate back in probate court last week, I wanted to take the chance to talk about some of the issues that have arisen thus far. I’ll address each in turn in terms of how they work in California probate matters.
Death Taxes (the Federal Estate Tax)
Aretha Franklin died without a Trust. For most individuals in California, failure to put their assets in a Trust means their estate will have to go through Probate Court. For individuals whose net worth is above the taxable estate threshold, it also means a large portion of their estate will go to the Federal government. The federal estate tax limit is $11.4 million for individuals and $22.8 million for married couples. This means that if you die with assets over that limit, your estate will have to pay taxes on those assets. Ms. Franklin’s estate is estimated to be roughly $80 million, well over the $11.4 million dollar threshold. Had Ms. Franklin worked with a savvy tax and estate attorney, she could have set up trusts to shelter much of her wealth from hefty federal taxes. Most of us won’t run in to this particular problem, at least while the limit remains so high.
2. Probate Court
Setting up one or more Trusts and properly placing your assets in the trust will avoid the need for a costly Probate. Probate can be particularly undesirable for well known individuals, as all information is generally public. A trust, on the other hand, can be administered privately and at significantly less cost.
3. Who will be Administrator of the Estate?
One of the larger issues at hand in Ms. Franklin’s estate is who will act as Administrator, or Personal Representative of her Estate. At present Sabrina Owens, Franklin’s niece, is the acting Personal Representative. A number of parties, including Aretha’s youngest son Kecalf, are objecting to Owens’ role and vying for control themselves.
Who will be the Administrator for an Estate can be a hotly contested issue in Probate cases when there is no Will. When heirs and beneficiaries cannot agree on a personal representative for the estate, much time and money is wasted on attorney’s fees, and distribution of the assets are delayed.
Often a judge will appoint a neutral third party professional in these instances, even if it is just in the interim while the parties work out among themselves who will be the administrator.
If Aretha had resided in Contra Costa County as opposed to Oakland County, Michigan, the probate judge likely would have appointed a neutral third party to act as Administrator.
4. Multiple Holographic Wills
Three holographic wills have been found in Aretha’s home. Handwritten wills can be admitted to probate court and confirmed as valid. Our firm has handled a number of cases where a Will has been found during the Probate. It has provided clarity on distribution and lead to the resolution of our cases. However, because multiple handwritten wills have been found in Ms. Franklin’s estate, they have created several issues for the Estate.
Validity of the Wills
Each will done by Ms. Franklin will need to be examined by a Professional to determine if it is valid. To be valid, a holographic Will needs to be written in the hand of the testator (ie Aretha) and adhere to the laws of the relevant state.
If all three wills are determined to be valid, the most recent Will takes precedence. Ms. Franklin’s last will appears to have been written in 2014. The 2014 will, while extremely difficult to read, appears to divide her assets equally among her children, while also including some gifts for friends and grandchildren. Because the Will is so difficult to decipher, however, even if it is confirmed valid it will likely lead to additional litigation.
A will should clearly express the intent of the decedent (person who died). If you examine the Wills done by Aretha, they are quite difficult to read and understand. If an estate planning document such as a will or trust is hard to understand it is open to interpretation. This opens it up to potential litigation - or fighting among beneficiaries.
What’s the bottom line here?
If you’re going to do a handwritten Will, make sure it is clear and understandable. In addition, be sure to follow all the required laws of your home state to ensure the Will is Valid.
What can we learn from Aretha Franklin’s Estate?
While one can never ensure their estate is 100% litigation proof, there are at least four lessons we can take from Ms. Franklin’s estate that can help to minimize attorneys’ fees, fighting among beneficiaries, and other costs.
Estate Planning documents should be legally valid and clearly written.
Carefully choose your Trustee or Executor, as well as backups if he or she cannot act. Discuss your choices with your beneficiaries so everyone is on the same page.
If you have assets in excess of $150,000 strongly consider placing those assets in a Trust to avoid the probate process.
If you have assets over the taxable estate limit, consult with an Estate Planning and Tax specialist to minimize federal estate taxes.