I hear that Aretha Franklin had no Will; what will happen with her estate?

I have read the same thing from many sources about Aretha Franklin having no Will. She was apparently a resident of Michigan and since she purportedly died without a Will or trust then the rules of intestacy will prevail. It’s like I tell my clients, if you have no Will then the State of Alabama has one for you under it’s rules of intestacy.

I don’t know the laws of Michigan but I will tell you what I do know and compare it to Alabama law. It is reported that Aretha left about $80 million dollars. I would suppose out of a mistrust by some older African American entertainers of unscrupulous agents or producers, Ms. Franklin was reported to have required payment of her fees in cash prior to all performances and the cash was kept with her in her purse on stage. That apparently worked well for her. I’m sure old habits die hard and may well have stemmed from low fees and attempts to cheat her in her early days of entertaining. Certainly Ms. Franklin earned her r-e-s-p-e-c-t for her talents and all loved her music. I know that this writer began to hear and enjoy her classics as a young boy.

From what I have read, she was divorced but has four sons, all-living. Her sons have all filed some type of document as “interested parties”, which I am unfamiliar with in Alabama. It seems for now that all sons are on board together and are in agreement with a niece of Ms. Franklin who has apparently filed a document to be personal representative of the estate. In Alabama the Code of Alabama, 1975 reads, §43-2-42,

(a) Administration of an intestate's estate must be granted to one of the persons herein named if the person is willing to accept and satisfactory to serve in the following order:

(1) The husband or widow.

(2) The next of kin entitled to share in the distribution of the estate.

(3) The largest creditor of the estate residing in this state.

(4) Any other person as the judge of probate may appoint.

In Alabama, any of the sons that reside in Michigan should be appointed as Personal Representative and not a niece.

Hopefully, as it sounds the sons are on board and would split everything four ways per Michigan law after all debts, funeral expenses, fees and taxes are paid. Apparently her attorney had encouraged her for years to make a Trust to keep her assets from becoming public.

If in Alabama Ms. Franklin’s, Probate Court named Personal Representative would have to be bonded based on the value of her estate which can be a very significant amount and within sixty days of being appointed as Personal Representative would have to file an inventory of assets, debts and actual values all of which will be public record. During her life a few things could have been done to drop her estate tax exposure that will hit the estate so hard. In years past she could have gifted up to $14,000 per person per year without having to file a gift tax return. This year could have been as much as $15,000. As an example if all four sons are married she could have gifted $28,000 per son and wife per year and $30,000 per son and wife this year before her death. Greater amounts could have been gifted but would have dropped her maximum gift and estate tax amounts available. I realize $112,000 to all four sons and spouses a year is a drop in the bucket even over several years when you are dealing with millions. Ownership of assets could have been protected somewhat by a trust both now and in the years following her death. Her Personal Representative, if in Alabama could be paid as much as 5% (2 ½ % that goes into the estate and 2 ½ % that goes out) of the assets. This will be a minimum of six months in probate if it had been in Alabama. I would expect this process to take years to work out.

One interesting thing that I read in my research was from the Wall Street Journal. It brought up the question of legacy. How and who will benefit from her likeness, her music (maybe some previously unreleased) in the future. These things could have been addressed before her death and probably in a successful way. The Personal Representative will have to address these things possibly in litigation in the future from anyone outside that may have a claim to her digital and perceived values.

The big hit I would expect because of her lack of planning will be estate tax. If we base her assets purely on the $80 million, there is almost $11.2 million protected for 2018. After subtracting $11.2 million from $80 million we have $68.8 million exposed to taxes. At a 40% tax bite from the Federal government, Ms. Franklin’s estate can be contributing as much as $27.52 million towards the national deficit. Talking about a lack of RESPECT! Fortunately, I read that Michigan does not pile on an additional inheritance tax.

You probably don’t have anywhere close to the millions that Ms. Franklin had, but I hope than you will P-L-A-N.

This article is informative only and not meant to be all inclusive. Additionally this article does not serve as legal advice to the reader and does not constitute an attorney- client relationship. The reader should seek counsel from their attorney should any questions exist.

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