Aretha Franklin, the “Queen of Soul” who collected 18 Grammy Awards and sang at concerts for three presidents (Carter, Clinton, and Obama), recently died at the age of 76. Ms. Franklin was twice divorced and is survived by four sons. These sons were named as interested parties in a filing with the probate court in Oakland County, Michigan in mid-August. The court filing indicated that Ms. Franklin, like many Americans, died intestate — without a Last Will.
When a person dies without an estate plan in place, he or she gives up the following:
Control over who gets what: If you do not leave instructions, the state in which you die will likely provide those instructions via their respective probate statutes. The first attorney I clerked under used to frame it for clients: “The state’s plan distributes your assets to your biological family, not your logical one.” In some cases, there can be a dramatic difference between who a person is close with emotionally and who they are related to by blood or marriage — including any non-family members you care about in your estate plan is the best way to make sure they receive that which you wish to leave them.
Asset protection opportunities: A properly drafted estate plan can provide structures that will help protect a beneficiary from themselves and/or the outside world. It is not uncommon for parents to create a variety of trusts to best manage how their children (or other heirs) receive assets after the parents are gone. Dying without a will leaves you with no opportunity to build these protections.
State Estate Tax Planning: If you are married and you live in a state that assesses an estate tax, it is likely that your attorney will recommend creating a marital or bypass trust upon the death of the first spouse. This trust will utilize the deceased spouse’s state estate tax exemption, while leaving the surviving spouse with access to the family wealth. Dying without this sort of planning may result in a family paying tens of thousands of dollars in unnecessary state estate tax.
Privacy: Probate administration (whether or not there is a Last Will) is a lengthy, public process. Over the next few months, I expect headlines to be made as Aretha Franklin’s estate files case documents. The filing that will generate the most buzz will be the filing of the estate inventory, an asset-by-asset list of everything Ms. Franklin owned when she died. No such filing is required when an individual prepares an estate plan based around a revocable living trust, so many families will go the trust-based route in order to keep things private after a death.
Probate rules vary from state to state, so the particulars of “who gets what if there is no will” depend on where you live. If you’d like to discuss how you’d like to pass your investments and other assets to your children, send us an email or give us a call. We would be happy to coordinate with your tax and legal professionals to make sure things are titled (and invested) appropriately.