- October 16, 2018
The ‘Queen of Soul’ passes without a will – what we can all learn
The headline should have been shocking.
“Aretha Franklin, Queen of Soul, dies without a will.”
Should have… but we’ve seen it before. She was far from alone. The following is a small sample of other famous people of significant wealth who died without a will:
- Bob Marley
- Pablo Picasso
- Jimi Hendrix
- Howard Hughes
How does this happen? True, some died young and unexpectedly. But what about the others?
“It’s safe to assume they had a host of advisors who no doubt implored them to have a will,” says Scott Winget, senior managing director of Family Enterprise Consulting at Cresset Family Office. “But obviously, those recommendations were ignored. Why? Sometimes their mortality is just too uncomfortable to think about. Sometimes they don’t want to upset their family and can’t decide how to divide things up. Sometimes it’s just a low priority.”
While it’s true that virtually everyone should have a will, for high-net-worth individuals, the ramifications of not having one can be particularly problematic. Not only can it lead to infighting, but it can also result in unnecessary costs and lost opportunities.
We will never know exactly why Aretha Franklin didn’t create a will. What we do know are the potential ramifications:
- First, without a will and an accompanying revocable trust, her entire estate, including the value of all of her assets, will become public record as part of the probate process. Beyond the loss of privacy, that could cost her family considerable money and take far longer to settle.
- Second, regardless of her intentions, each of her four sons can be expected to receive one-quarter of her estate. Even if that’s what she wanted, without an estate plan, the executor (assigned by the court) will decide who gets what.
- Third, if she had certain causes she cared about, none of her assets will go directly to those charities, where they no doubt could have done considerable good.
- Fourth, if she had done at least some minimal estate planning during her lifetime (such as in the form of gifting), she likely could have reduced her estate tax bill.
- Lastly, it is believed that one of her sons has special needs and an appointed guardian/conservator. Without the correct trusts and documents in place, costly court supervision may be required, and he may lose access to public benefits.
Thankfully, there is a silver lining to all of this in that it serves as a cautionary tale and a reminder for the rest of us to ensure we all have the basics of an estate plan. The following is a checklist to get you started:
- First and foremost, it’s never too early to start. Creating a will is not something you do later in life. Particularly if you have a spouse and/or children, it is essential. “If you don’t have a will in place, you are essentially telling the state to make your decisions for you, and every state has its own rules to divide up property,” Winget explains.
- Review your beneficiary designations for retirement accounts and life insurance policies. Are the people listed still the right ones? Have you listed any contingent backups? In many instances, it’s been years or decades since those beneficiaries were chosen. Do you want your ex-spouse to receive your 401(k)?
- Get your personal durable power of attorney and health care proxy (living will) drafted. This is critical to ensure your wishes are followed in the event you are ever unable to make decisions for yourself (even if just needed temporarily).
- Select a person you trust to serve as the executor or administrator of your will. That person will help ensure your assets are distributed according to your wishes. If you don’t, the courts will choose that person for you.
- Create a personal property memorandum, a simple document referred to in your will that you can draft on your own and identifies who will receive your personal items, such as collectibles and family heirlooms.
- For larger and more complex estates, it’s important to engage in more advanced wealth planning to mitigate your estate tax liability and protect your family’s assets. This is especially true for those with complex assets (e.g., private company interests, real estate, intellectual property, art) or estates in excess of the current estate tax exemption of $11.18 million ($22.36 million for couples).
- Share with your loved ones that you have a will, where to find it, and the location of all of your assets and accounts. You can imagine the confusion if you were to pass unexpectedly without sharing that information.
- Finally, communicate to your loved ones your wishes as expressed in your will. That will help avoid surprises, and more importantly, will serve as a foundational discussion on family values.
“Aretha Franklin’s passing is yet another sad example of why it’s so important that we all have a will and estate plan,” Winget concludes. “To procrastinate is to waste money and allow others to potentially frustrate your intentions. Through the thoughtful creation of an estate plan, you are protecting your family and helping to ensure the legacy you desire is realized.”