Aretha Franklin: Net Worth = $80 million; Will and Trust = 0 8/22/18
Aretha Franklin, the Queen of Soul, recently died leaving an estimated $80 million estate and no will or trust. Her four sons have filed with the probate court as parties interested in her estate. Franklin’s niece, Sabrina Owens, asked to be appointed the estate’s personal representative, effectively becoming the executor of Aretha’s will and estate distribution. It is too soon to know how all this will play out, but there are lessons to be learned.
Privacy Aretha was deeply private during her lifetime. Now everything will be exposed to the public. As a celebrity, I imagine every journalist will be pouring over every document, interviewing surviving family, and sitting in the courtroom when the judge outlines how her estate will be distributed. It will make headlines!
Taxes With proper planning it is possible the estate could have significantly minimized the estate tax impact. After applying the exclusion and rounding the amounts, approximately $70 million is exposed to estate taxes. The beneficiaries will have access to about $50 to $52 million. Still a tidy sum, but assuming the estate will be divided equally between her four children, they now receive maybe $13 million each rather than $20 million.
Equal Does Not Equal Fair It is too early to know how the family dynamics will evolve, but when this much money is on the table, real personalities have a way of revealing themselves and fair, like beauty, is in the eye of the beholder. If we bet on historical evidence, it is almost certain there is a tempest on the horizon. My guess is a gang of lawyers is already contacting each child to individually represent them. The combatants are entering the arena.
Who is That Knocking at The Door? Without a will and trust, who knows how Ms. Franklin wanted her estate to be distributed? Why does the niece want to be the representative? What about other nieces and nephews? We do not know yet if there are grandchildren, but if there are, will any of them want a piece of the action now rather than waiting for it to pass through dad before they can inherit anything, and who knows if there will be anything to inherit if dad spends it all before he dies? Will the nurse, assuming she had one at the end, or caregiver, or maid contend they were promised a certain amount of money? Did Aretha have brothers and sisters who believe they have a right to the estate? What about her music and talent agents? There could be a lot of banging on that door.
Help or Harm We have no idea if her four sons will be good stewards of their inheritance or whether that much money will lead to undesirable outcomes. The proven fact is 70% of wealth is lost each time it passes to the next generation. It is a real probability Aretha’s great grandchildren will never see any of the wealth she created. It is also probable the four sons who seem amicable now, may wind up being estranged for the rest of their lives. Hopefully not, but very possible.
Making a Difference in the World Aretha Franklin started her career singing in her church. She maintained her Christian faith and church involvement throughout her successful and extraordinary career. Was it her intent some portion of her wealth would be used to support her beliefs and used to help others who did not have what she was so blessed to have received? Will her legacy die with her?
We are fortunate to have benefited from a woman who was able to share her God-given talent with the world. Her music and songs will be her legacy, but the lyrics will eventually be forgotten, new singers will take over the stage and airwaves, the beat will not go on, and her songs will be added to the “Golden Oldies” list. Her attorney is quoted as saying, “I was after her for a number of years to do a trust. I just hope Franklin’s estate doesn’t end up getting so hotly contested. Any time they don’t leave a trust or will, there always ends up being a fight.” One wonders how much better it could have been for everyone, especially her family, if the really important stuff was properly planned and implemented rather than procrastinated.
Kip Kolson is the president of Family Wealth Leadership, a multi-family office and family coaching firm, and author of You Can Have It All; Wealth, Wisdom, and Purpose—Strategies for Creating a Lasting Legacy and Strong Family. You can order your copy at Amazon or email firstname.lastname@example.org