When Aretha Franklin died in August 2018 she left behind a legendary career and music that touched millions of people. She also left behind an $80 million estate and a nightmare for her four children. Aretha Franklin died without a will or trust. She had done no estate planning even though encouraged by her attorney for years.
By law, her four children will split the estate equally. But that happens only after the Tax Man does his job. Because Ms. Franklin died in Michigan, where there is no estate tax, the estate owes nothing at the state level. But the federal government charges a 40% tax on everything above $11.18 million. That means her federal estate bill is approximately $27.5 million, an amount higher than would have been paid if estate planning had been done.
This is not a new story. In 2016 Prince died with a $300 million estate and no estate planning. His estate paid the 40% federal tax. But Prince died in Minnesota, which does have an estate tax. Add another 16% to the total tax bill.
There is a long list of famous people who just didn’t get around to doing estate planning. The list includes Amy Winehouse, Bob Marley, Jimi Hendrix, Howard Hughes, Elvis Presley, Abraham Lincoln, and Martin Luther King, Jr.
Your estate is just as important. Sure, you’ll be gone when your estate is settled. But if you want your assets to go where you want them to, and you want to eliminate family in-fighting, do some planning while you still can.