Aretha Franklin Died with the World's Respect.
Yet She Did Not Have a Will.
Yet She Did Not Have a Will.
This means The Queen of Soul’s estimated $80 million fortune will not be settled efficiently according to Ms. Franklin’s documented wishes. It will be settled very inefficiently by a Michigan probate court - and many other courts of law.
If one dies without a will or other legal documents to be discussed here, one is said to die “intestate”. With intestate succession, or the distribution of property, laws vary widely from state to state. If the deceased held assets in multiple states the complexity of succession becomes substantially more complicated.
A signed and witnessed will is the most basic legal document by which a person designates how their estate should be settled and possessions distributed after they die. The person designates an executor, whose job is to pay all debts and apportion what remains according to instructions of the deceased.
A will is revocable and subject to amendment at any time during one's lifetime. It can also be contested by heirs on a variety of grounds. Heirs may claim the deceased was of unsound mental capacity or was unduly influenced. If a will is successfully challenged it can be voided in whole or in part.
A living trust is another legal document that provides lifetime and after-death property management. If a living trust is properly written and funded one can avoid probate on assets, plan for the possibility of their own incapacity and prevent their financial affairs from becoming a matter of public record.
A living trust is more expensive to set up than a typical will because it must be actively managed after it is created. It must be funded, and it controls only those assets that have been placed in the trust.
Beyond a will or living trust is state and federal estate or inheritance tax, not so popularly also known as “death tax”. Rumors that estate tax has been repealed abound. Though it has again been modified, federal estate tax has not been repealed.
Federal estate tax applies only to individuals with a net worth of over $11 million, for a married couple, $22 million. That still affects a significant number of affluent Americans. It will certainly affect the estate of Aretha Franklin.
Proper estate planning can address any number of issues following one’s death.
- Right of survivorship can transfer jointly owned assets to a spouse without the need for an executor.
- Trusts of many varieties serve to control and preserve assets, during one’s life and upon theirs death.
- Trusts may be revocable and irrevocable. Life insurance trusts and testamentary trusts have unique applications and benefits.
Upon one’s death a myriad of factors come into play. A single person with children faces different issues than a single person without children or a married person with children. Unmarried couples and domestic partners face unique issues of their own.
If the deceased owns real estate or other fixed assets in a state other than where they reside, without a will the state in which that property is located will determine ownership.
In the case of Aretha Franklin and her $80 million net worth, estate settlement will indeed be a time consuming and pain staking process. Years will pass before determinations are made and heirs receive property. Vast sums that could go to those heirs will instead go to attorneys, and, in all likelihood, federal and state governments.
Regardless of one’s net worth, be it $100,000, $80 million or something in between, estate planning is essential to ensure that net worth is preserved during one’s life and distributed as one wished upon death.
The Value of a Trusted Advisor
Having a strong relationship with an advisor can help you be better prepared to live your life through the ups and downs of the market. That’s the value of discipline, perspective, and calm. That’s the difference the right financial advisor makes.
Gaynes Financial Services