A few weeks ago, the world of music lost another legend – Aretha Franklin – who died from pancreatic cancer. According to the Detroit Free Press, she died without leaving a will. With an estate worth an estimated $80 million, it will be going through an expensive and time-consuming process known as probate. As of the time this blog is being written, it has been reported that her four sons have expressed interest in her estate as well as a niece who has requested that the court appoint her as the estate's personal representative.
Franklin's attorney of thirty years, Don Wilson of Los Angeles, said, “I tried to convince her that she should do not just a will but a trust while she was still alive...she never told me, ‘No, I don’t want to do one.’ She understood the need. It just didn’t seem to be something she got around to.”
Besides her catalog of music and bank accounts, worth tens of millions of dollars, Franklin reportedly had several pieces of property in the Detroit area that according to tax assessors’ estimates are worth at least $2 million, with a market value that could easily be twice that. Once the value is established — a process that could take years — the IRS will take any back taxes Franklin owed, then will tax her estate at 40 percent for any assets beyond $11.2 million. Quite a mess.
Making sure that your estate ends up where you want it to may be a lot more complicated than just having a will. 401(k) accounts, insurance policies and IRAs have their own named beneficiaries and will pass to the designated person, despite what is in the will. The reason for this, most of the time, is the failure to update these accounts as circumstances change.
And as we wrote in a previous blog, a will is just not enough in many cases to protect your estate from court battles, probate and taxes, all of which cost time and money. Planning and working with a professional is the best way to manage your assets to make sure they end up where you want them to using the appropriate legal tools.
But Franklin is not the only celebrity who made some poor choices regarding their estates. Let's look at some other estate missteps made by celebrities that should be a lesson for the rest of us.
Whitney Houston made her will in 1993 before the birth of her daughter Bobbi Kristina and continued to make changes up until 2000. However, those changes stopped on that date, even after her divorce. Estate plans should be updated every few years, whenever your assets change, or you have a major life event that may affect the designations in the plan. Having an estate planning attorney is the best way to review your plan and make sure it fits your current life and not the life you had when you developed it.
Following his death just over three years ago, court filings indicate his estate is worth at least $200 million. Lacking a will, multiple claimants have now come forward including an unknown woman claiming to have been married to him as well as siblings, children and relatives. The probate court in Minnesota ruled that six siblings would be the heirs to his holdings, this was then followed by multiple appeals. Now, two years after Prince's death, bankers, lawyers and consultants have earned millions, and so far, heirs haven't received anything.
Philip Seymour Hoffman
Philip Seymour Hoffman put together a will in 2004 when his estate was estimated to be $500,000. It was never revised to reflect the success he achieved after that. At the time of his death, the value of his estate had ballooned to $35 million and he had more children. He also made it widely known that he refused to put trusts in place for the children believing it would "spoil the kids". His lack of knowledge about trusts and refusal to consult with an attorney created major problems for his estate as well as major tax bills.
Hendrix died nearly fifty years ago and the battle over his estate ground on for over three decades. In 2002, Al Hendrix, the late singer’s father, died and left his daughter in charge of the remaining estate that was estimated to be worth $80 million. In July of 2015, a settlement was finally reached prior to a jury trial.
Heath Ledger followed his adviser's advice and put together a proper estate plan, unfortunately at the time of his death, there were two pieces of it that failed. First, the plan did not take into account the birth of children. An appropriate estate plan will include how assets should be allocated if a child is born. Second, he failed to update his will after his daughter was born. As we indicated earlier, an estate plan needs to be reviewed on a regular basis and reflect any changes in lifestyle or major life events.
The “Godfather of Soul” died in 2006 without a will and unfortunately, the matter is still in the courts. The first challenge came when Tomi Rae Hynie sought to be named his legal spouse, which was eventually agreed to by the courts. This was then followed by his six children who filed lawsuits seeking to have that ruling overturned. This is still awaiting resolution.
We bring up the celebrity aspect of not having a will or comprehensive estate plan because those in the entertainment field, surrounded by agents, handlers and personal financiers would be expected to have someone looking out for their long-term interests. Obviously, this is not always the case and as a result, going through the process of probate can end up being a matter that lasts for years and in some cases, decades.
However, probate is not a problem that just effects the rich and the famous. Having a will as part of an estate plan is just as important for middle and upper income people as well. Dying without a will means that the courts will distribute your assets according to that state’s rules which may not be in accordance to your wishes -- and Investor’s Business Daily reports that nearly half of the estates in the United States end up in probate court.
So what about the online sites that offer wills that can be completed and downloaded? They are advertised as inexpensive and simple to complete. Perhaps, but to the buyer - beware.
The negative of these sites and the forms they put forth is that they may not address all the needs, goals and wishes of the person completing them. There is also a possibility that they may not be in compliance with some state's regulations and as we said before, a will just may not be enough.
“These forms tend to be very impersonal and cannot possibly address all the scenarios or issues which can arise in a person’s life,” said Attorney RJ Connelly III. “Planning with an elder law attorney gives both parties a chance to know and understand what is important to the client and allows the development of an estate plan that accurately reflects the unique needs and wishes of that person or couple.”
There are other limitations to the online legal websites as well.
“One of the things you will see with many of these sites is that they clearly advise that they cannot offer legal advice – and because states may have specific laws around wills and estates, an error could easily be made. Not understanding individual state laws could lead to a mistake which could prove disastrous, especially if it is not updated to reflect life changes”, continued Connelly.
In most of the cases we highlighted above, money appears to be at the center of the disputes however family greed and selfishness is rarely the motive for the public battles that occur in the court. Attorney and author Mark Accettura has done extensive research into family discord that arises after the loss of a family member.
“Stories of families in conflict at the death of a loved one are regular fodder in the media. It is easy to mock them; they look ridiculous and it all seems so petty. We wonder why people just can’t get along. But, after some study I have learned that what appears as greed and pettiness are really symptoms of survivors’ struggle to feel loved and important. The fight for money and things – Dad’s watch, Mom’s wedding ring – is not about the object or the money itself, but about what they symbolize: importance, love, security, self-esteem, connectedness, and immortality,” stated Accettura.
To follow up on Accettura’s point is a matter we are aware of involving an estate battle between two older sisters following the death of their elderly mother. By all reports, this was a close family who had significant real estate and stock holdings but no will or estate plan. Although there were the two living sisters, a third sister, who had died as a toddler due to meningitis, was also in the mix – and it was the deceased sister's belongings that became the center of the family dispute.
Following the death of the youngster some four decades earlier, the mother kept a box of cherished clothing, books and toys that belonged to her. Also in the box was the mother's prized possession, a teething biscuit with the child's teeth marks on it .
This box symbolized a life that was never fully lived and the hopes and dreams of what could have been. Although both surviving sisters had agreed amicably upon the distribution of tangible property and other financial assets, the battle centered on who would get control of this box of priceless and irreplaceable memories.
This battle drew on for over a year until an agreement was reached -- the property would be kept in a safe deposit box. Unfortunately, the emotional damage that resulted from this conflict caused a rift that may never allow a once close family to heal and move on. In the end, this was not a fight over something measurable – it was a fight over the intangibles of love, approval and memories.
"This case is a prime example of what occurs in many probate battles that play out in the courts," added Attorney Connelly. "Individuals often fail to account for personal property in their estate plans, which is why we try to explore these issues with our clients. Family heirlooms, collectibles and other personal items that hold sentimental value leads to plenty of fighting, both legal and otherwise, that can cause untold misery for all concerned."
Having a will as part of a comprehensive estate plan can help mitigate issues
like this. Although there still may be some disagreements during the estate planning process, sitting with the attorney helps a family put things into perspective without being forced to resolve such a dispute during a time of crisis and grief or even worse, putting such a personal matter into the hands of the court. And because probate becomes a public issue, such battles may become newspaper stories which can drive the emotional wedge even deeper into an already broken family.
“All families have underlying rivalries and conflict, it's human nature,” said Connelly. “The estate planning process allows us to counsel our clients on the negatives of taking certain actions that may be viewed as punitive or motivated by anger while encouraging them to mend any fences that may be broken. We want them to have a plan that leaves a legacy of caring and love and not one that furthers family conflict."
Connelly continued, “At the same time, we also want to protect our clients from possible predators from within the family or those outside of the family who may be likely to manipulate or take advantage of just such an emotional situation. It is our duty, both ethically and morally, to provide the appropriate guidance for our clients at one of the most vulnerable times of their lives."
Here's the bottom line -- everyone needs to plan for their estate and how the assets will be distributed to the heirs. Although a Will is the cornerstone of this, a more sophisticated estate plan involving tools such as trusts can help maintain privacy and avoid expensive and time consuming probate.
To discuss estate planning with us, give us a call at 1-855-724-9400.
Attorney Connelly practices in the area of elder law. This area of law involves Medicaid planning and asset protection advice for those individuals entering nursing homes, planning for the possibility of disability through the use of powers of attorney for the both health care and finances, guardianship, estate planning, probate and estate administration, preparation of wills, living trusts and special or supplemental needs trusts. He represents clients primarily in the states of Rhode Island, Connecticut and the Commonwealth of Massachusetts. He was certified as an Elder Law Attorney (CELA) by the National Elder Law Foundation (NELF) in 2008. Attorney Connelly is licensed to practice before the Rhode Island, Massachusetts, Connecticut, and Federal Bars.