Recording legend Aretha Franklin passed away recently, and while we pause to reflect on the incredible musical legacy she left behind, we’re saddened to see the headaches she left for her heirs.
Some estimate Ms. Franklin’s estate to be worth in excess of over $80 million, and yet she didn’t have a will or trust at the time of her death.
If Aretha had been married when she passed away, her estate may well have passed tax-free to her spouse under the “unlimited marital deduction.” But since she wasn’t married, her four children will each receive an equal portion of the estate – and then taxes will become an issue.
If the valuation estimates of Ms. Franklin’s estate are accurate, the tax bill for her children could be nearly $28 million. Our estate planning attorney noted that, without a trust established by a will, those assets could be taxed again when her children die.
The situation Ms. Franklin left behind is a great reminder that estate planning is something we all should consider. While many of us don’t have iconic hit songs and tens of millions of dollars to leave behind, the heartache our relatives could experience from a lack of planning is universal.
If you’re interested in what’s best for your family, there are details to consider. One of Aretha’s children is reportedly a special needs individual. Absent a will, her special needs child could lose any aid currently being received by Medicaid, supplemental Social Security, or even subsidized housing. And who will administrate her special needs child’s portion?
Granted, that aid could potentially be replaced by the money she left behind – but now, her estate must be appraised through a complex valuation process that tries to determine the future value of income, which includes song royalties and image rights. If the process deems there is a rich future value, taxes on the estate could rise beyond the $28 million.
Planning how your estate will pass is a kindness you can leave your family, potentially letting them focus on each other instead of valuations and taxes.
Look for an advisor you can trust – preferably one who has an estate planning attorney on their team – who can give you advice you can trust and help you take positive steps on behalf of your family.