The Costly Consequences of Aretha Franklin’s Incomplete Estate Plan

This Is What Can Happen When You Screw Up Your Estate Plan

Who can forget the soaring voice of Aretha Franklin? Whether singing a gospel standard like “Amazing Grace” or a huge hit like “Respect,” Franklin’s talent and determination helped her build an $80 million estate, with ongoing earnings from music, licensing, and royalties.

But sadly, Franklin didn’t create a coherent estate plan before she died in 2018. Initially, her children thought that she died without a will. Under Michigan’s intestacy laws – the rules that apply when someone dies without a will – her assets would be divided equally among her four sons.

Aretha Franklin’s Handwritten Wills: A Cautionary Tale for Celebrities and Everyday People

But, over the next few years, a total of four wills were found:

• Two handwritten wills prepared in 2010, one of which was signed on each page and notarized.
• A handwritten will prepared in 2014, found under a couch cushion in Franklin’s home and signed only on the last page.
• A typewritten will prepared in 2018 by a law firm in Franklin’s home but left unsigned.

It’s not as if Franklin didn’t know she needed an estate plan. She was diagnosed with cancer in 2010, and her early wills appear to have been an attempt to set down her thoughts on who would inherit her wealth.

And she was obviously trying to complete her planning in the months before she died. But in the end, her estate was settled in the harsh limelight of court by a jury in Michigan. In July 2023, it was decided that the 2014 will was valid.

The Aretha Franklin Estate Battle: Highlighting the Need for Thorough Estate Planning

This isn’t the place to discuss the disagreements among the four brothers, one of whom has unspecified special needs and resides in an assisted living facility. But we will point out that the entire drama was an unnecessary waste of time, money, and energy. Not to mention the unwelcome publicity accompanying the process.

As of 2020, the lawyers handling the case had billed the estate $586,566 for handling the probate case. A public filing in March 2023 revealed another $900,000 in legal fees over the previous 12 months, although it’s not clear what proportion of those expenditures were related to Franklin’s estate.

We also don’t know how much estate tax Franklin’s estate will need to pay, although when she died, she owed millions of dollars of federal income tax.

In 2022, her estate settled the tax claim with the IRS for $7.8 million. At her death, the estate tax threshold was $11.18 million, which means whatever assets are left to be divided among her children will be substantially less than $80 million.

We estimate they’ll have a federal estate tax bill around $27.5 million; 40% of the excess above $11.18 million.

Had Franklin started a comprehensive estate plan in 2010, after being diagnosed with cancer, her children’s exposure to estate tax could have been greatly reduced, if not eliminated.

What’s more, it would have been relatively simple and inexpensive to set up a “special needs trust” for her oldest son, who is disabled, to ensure that he would be cared for the rest of his life.

And of course, advance planning would have avoided the courtroom pageant her family suffered through.

From “Respect” to Regret: Lessons Learned from Aretha Franklin’s Unfinished Estate Plan

Of course, this isn’t the first legal squabble involving a celebrity estate.

We wrote about the fight over the assets of legendary talk show host Larry King from 2021 and those of pop star Prince in 2018.

In all cases, the biggest tragedy of not having an estate plan – or one that’s incomplete – is that you have no say in who will control your legacy. And if you don’t make arrangements to hand off decision-making authority to someone you trust in case you become physically or mentally disabled, you risk being thrown into America’s notoriously corrupt guardianship system.

That’s why we recommend to our clients that no matter how much wealth they possess, they prepare four basic estate planning documents:

1. A living will, which describes the type of care you desire if you become permanently incapacitated or terminally ill. For instance, it will address the circumstances under which you wish to receive treatment possibly prolonging your life.
2. A durable power of attorney for health care, which is a formal appointment of someone you trust to be your health care agent. This person will make the necessary care decisions for you if you are unable to do so. (A living will and durable power of attorney for health care are ordinarily combined in one set of instructions, called an advance directive.)
3. A durable financial power of attorney, which assigns someone you trust the authority to act in your place. It comes into effect if you ever become physically and/or mentally incapacitated. Once it does, the person you name in this capacity will be acting in a manner legally equivalent to guardianship. They will take care of important matters for you – paying bills, managing investments, etc.
4. A “regular” will, which memorializes your instructions for the division of your wealth among those you care about. The individual or company you name in your will as your executor, or “personal representative” in some states, must present your will to probate court. A judge will then authorize the executor to gather your assets and distribute them to your beneficiaries after any debts are paid.

Another document we recommend to all of our clients is a living trust. The biggest benefit is that the assets in a living trust, or that are controlled under its provisions, need not go through probate.

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Since 1984, we’ve helped more than 15,000 customers and clients protect their wealth using proven, low-risk planning.

If you’d like to see if The Nestmann Group can help you develop a bespoke plan that meets your needs, the first step is to book in a free no-obligation consultation with one of our Associates. Feel free to do so here.