By Kip Kolson, Special for TTU
In August 2018 I wrote an article Aretha Franklin: Net Worth = $80 Million; Trusts & Wills = 0. At the time of her passing no wills were found. It now seems there were at least three handwritten wills; two in a locked cupboard and one scribbled in a spiral bond notebook under a cushion of the living room sofa. There are a lot of legal questions too detailed to discuss here, but let’s revisit the sad and difficult conditions facing her heirs.
Aretha had four sons who have claimed interests in her estate. A niece, Sabrina Owens, petitioned the court to designate herself as the executor of the estate and apparently this was granted. The following quotes are from an article from WealthManagement.com written by Anna Sulkin and published May 23, 2019. “A hearing is set for June 12 (to determine if any, or which, of the wills is valid). A statement released by the estate said two of her sons object to the wills.”
“One of the purported will documents, as published by AP News, appears to indicate that her original handwritten will from 1972 or 1973 was stolen or given to some individual (the name was illegible). According to AP News, Franklin’s son Kecalf Franklin is claiming (in a separate court filing) that the 2014 will (under the cushion version) indicates that Aretha wanted him to serve as the estate’s representative.”
“According to an article by NBC News, Aretha intended for her three younger sons to be treated equally in their inheritance, which she stipulated they will only receive on completion of a degree or ‘business administration courses.’ The wills also mention two of the sons are to receive one of her homes and monthly allowances, and all four children are to take equal shares of her music royalties as well as her memorabilia. She additionally outlines detailed care instruction for her eldest son, Clarence Franklin, who according to the NBC News article, has special needs that have never been publicly disclosed. She emphasized that the father of Clarence should never ‘…receive or handle any money or property belonging to Clarence…’”
A Good Example of Bad Estate Planning:
- Estate taxes will eat up a good portion of the estate. For example, the lifetime exclusion in 2018, when Aretha died, was $11.2 million (rounded). Assuming the estate is worth $80 million, $68.8 million is subject to the highest federal rate of 40%, so $27.5 million will go to the government and $52.5 million to the heirs. Any state inheritance taxes will reduce it further.
- Wills, even when valid, do not avoid probate. That means the court and attorneys will be involved. Considering the contention already around multiple, handwritten, and in one case unsigned and non-witnessed wills, it could easily be assumed there will be another $10 million of court and legal fees; further reducing the estate to around $40 million.
- Multiple handwritten wills drafted at different times by a singer, without legal counsel, is equivalent to doing surgery on oneself depending on how one is feeling at any given moment. The confusion and ambiguity surrounding this estate is off the charts. It would have been better to have no wills and let the court settle everything. It is possible we will be reading articles about Miss Franklin’s estate for the next five to ten years before it is finally settled.
- Why does the niece want to be designated the representative of this hornet’s nest? Administering a well-documented estate that has clear and specific instructions is difficult and thankless. There is no indication the niece was identified as inheriting anything in any of the wills. Since compensation for acting as the executor is relatively minor and it is doubtful she is doing it out of the goodness of her heart, we can only assume she sees this as possibly a winning lottery ticket. Of course, it increases the possibility of more legal battles and less going to the four children.
- Since she had four sons, why are only two sharing in the houses? I assume she only had two houses. It is unclear from the article whether each son is getting one house, or they are sharing equally in multiple houses. Both situations are potential disasters. If each gets one house will they fight over who got the better deal? If sharing equally in multiple houses, splitting tangible and illiquid assets can be difficult, tricky, and expensive.
- Everyone gets equal shares of royalty income and memorabilia? There is nothing as unfair as the equal treatment of unequal people! Why should a child who has proven himself to be irresponsible and lazy receive the same amount as a child who is productive and a good steward? What if one of the children has addiction problems, or in this case, has a special need? How do they divvy up the memorabilia? What if one son wants to keep mom’s golden records and the other three want to sell them for the cash. Who gets what and how will it be accomplished?
- How are the restrictions on their inheritance to be monitored and controlled and who is the monitor? If the criteria are not met, who then receives the income and at what percentages? What if, instead of a degree, the child becomes a missionary or social worker or goes to vocational school, and the child that gets a degree does nothing with it? What if some children marry and have families and others stay single, and the single one is the only one with a degree? Do the three lose their inheritances?
- Why is Kecalf pushing the 2014 version of the will? Could it be there is language that, in addition to designating him as the trust representative, favors him in some other way?
- Clarence, the special-needs child, fortunately seems to have been cared for, but who will take care of him and manage his share of the estate? His birth father has been eliminated, but does that mean one of the other children becomes the caregiver or some third-party non-family person? In either case, will the caregiver possibly use their role for their own advantage rather than the person they are caring for? Who monitors the caregiver? If her intent was one of the other children would be the caregiver, did she have that conversation with that child and did that child agree? Will that child be adequately compensated for the very difficult role of being a caregiver?
- The article says, “Aretha intended for three of her children to be treated equally.” Why only three? Was it because Clarence was treated separately? Is he getting more or less than the one fourth he would have received? Will this be a point of contention for the other children?
The major takeaways from this story are the lack of communication and proper planning. It is obvious Aretha never had conversations with all the children around the table at the same time to discuss what she wanted her estate to do for her children and society after she died. Parents who do their estate planning in secret do great damage to their children. She did not get help and advice from an attorney, accountant, and financial advisor. As a result, she has left a legacy of confusion, chaos, and conflict in her family that may erase the memory of all the wonderful music she gave the world.
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, the FWL website below, or email firstname.lastname@example.org