Many people know that Aretha Franklin passed away on August 16, 2018. Many people may know some of her most popular songs, such as “Respect” or “A Natural Woman,” and that she was often referred to as the Queen of Soul. However, something many people may not know about Aretha Franklin is that at the time of her death, she had $80 million and no estate documents in place.
What does this mean for Aretha’s family, finances, and estate?
It means no one knows how she wanted her assets to be distributed. Did she want everything to go to her kids? Did she want to leave something for other family and friends? Did she have charities she was passionate about and want to gift money to those causes?
With estate documents prepared beforehand, she could have divided her money, homes, and property among the people and charities she cared about most. Instead, the state of Michigan will decide for her.
This is not a unique situation.
Many people do not have a will, living trust, advanced healthcare directive, or power of attorney for finances. When you don’t have the proper estate documents in place, the state you live in will choose where your assets go in the event of your death. Each state has their own order of who will receive your assets. For a married person with no kids, the surviving spouse gets everything in Michigan. But in California, the surviving spouse gets all community property and half of the separate property. The other half of separate property goes to the siblings of the deceased person.
Estate documents clearly state who gets what. Don’t let the state decide for you. If you don’t plan ahead, that family member you haven’t talked to in decades could end up with everything.
In addition to your state making decisions for you, it is also very expensive not having estate documents.
California charges a lot of money to transfer your assets to family members. California is one of the few states that have “statutory fees” for attorneys. This means there is a defined fee schedule that attorneys can charge the estate to get it through probate.
Let’s say you have a $500,000 home with a $400,000 mortgage. For this example, we will keep it very simple and say you have no other assets. If you die unexpectedly with no estate documents, an attorney can charge your estate $13,000 based on the $500,000 value of your home. The mortgage is NOT netted from the value of the home to determine the fee! There are also probate filing fees that can add up to a few thousand dollars more.
Compare such large probate fees to getting estate documents for around $2,000. It makes financial sense to have proper estate documents. Don’t give away thousands of dollars to an attorney after you die. Pay them a few thousand while living and do this right. And, it’s the only way to ensure that your assets pass according to your wishes.
Aretha Franklin will always be the Queen of Soul.
However, she will also be an example of the consequences of not properly planning for the future of your assets. Hopefully her family will not pay too much in legal and probate fees to get through this. For those reading this article, I hope you will take this as a wake-up call to get your estate documents in place.