Aretha Franklin – Queen of Soul

We learned recently that Aretha Franklin, the late Detroit native and Queen of Soul to millions of her fans around the world, has died without a will. News reports to this effect broke early last week, causing many to wonder how this will affect the vast wealth she accumulated during her lifetime. Many reports have estimated her net worth to be approximately $80M. Her passing garnered reaction from the likes of former President Barack Obama, for whom Aretha sang at the 2008 inauguration. Right in our neck of the woods, though, her estate is a fascinating study in the merits of estate planning and the probate procedures in our great state.

What happens in Michigan without a will?

Under Michigan law, if you own property in your own name when you pass away, the transfer of your property is governed either by your estate plan, or, if you don’t have one, by the laws of intestacy (intestacy being the legal term meaning “without a will”). It is important to note the key element that defines a probate asset: it must be titled in your own name. Therefore, assets such as jointly titled accounts, property with a pay-on-death beneficiary, and life insurance policies, none of these would count toward Aretha’s estate if she had any. Jointly titled assets pass to the surviving owner, beneficiaries receive their property outright, and life insurance proceeds are assets of the beneficiary, not the policy owner. The only property that would pass via intestacy is that property that she owned at her death in her own name.

A question that remained unresolved at Aretha’s passing is, who would handle her estate? It appears from court filings in Oakland County Probate Court that Aretha’s niece, Sabrina Owens, has asked for appointment as personal representative. (Personal representative is the term used in Michigan law to refer to the court-appointed executor or administrator of a deceased person’s estate). It also appears that Aretha’s children are all in agreement for Sabrina to be appointed. This likely demonstrates some level of Aretha’s children being able to work together, certainly a positive sign for the estate. An interesting note: a quick search of the Wayne County Probate Court website reveals that Aretha herself served as the personal representative for her late father’s, brother’s, and sister’s estates.

Another item of note is the potential nature of Aretha’s estate assets. As a world-renowned singer, she likely retained title to rights to her music, image, and other copyrighted material. Depending on the nature of those agreements, the rights to those properties may pass to a someone else, not necessarily Aretha’s estate. The public may never know, if these rights transfer outside of probate.

How will the assets be distributed?

Once a personal representative is appointed, that person must distribute the property, among other tasks. By the laws of intestacy, Aretha’s entire estate passes down to her children in equal shares. She has 4 children, so each gets ¼ or 25%. However, that inheritance is subject to other items of higher priority, such as administrative fees and expenses, taxes, property exemptions, creditors, and liens. Depending on how much it will cost to dispose of all the property, these items could dramatically reduce the amount going to the heirs. The total value of Aretha’s estate will eventually have to be disclosed to the court in an inventory.

Last but not least, we come to the issue of estate taxes (or so-called “death taxes”). This is likely to be a major issue for the estate. The federal estate tax only applies to individual estates valued over $5.6M in 2018. Estates over such amount are taxed at an incredibly high rate, maxing out at 40%. Unfortunately for the beneficiaries, taxes are paid before they will receive their share. Notably, however, the state of Michigan no longer has any inheritance tax for decedents who died after September 30, 1993.

As was the case with the notable passing of Prince in 2016, it appears that Aretha Franklin did not have a traditional estate plan in place. As a probate attorney, I can attest to the merits of having such a plan. It can make decisions much easier for your family and allow them much more certainty in handling an estate worth so much. It can also enable your heirs to save on taxes and other major expenses.

Aretha’s passing surely will cause her family and friends to miss her dearly, and the rest of us mourn her loss as a local legend and a world-class talent. We can all hope her family will benefit from her estate.