The Queen of Soul died in 2018 with an estimated net worth of $80 million. She left three handwritten wills and four sons. The three wills are contradictory to each other and will cost her heirs a tremendous amount of death taxes, legal fees, probate costs, and family strife.
What are the lessons learned here?
- You can avoid probate. Probate is expensive in both time and money. Small estates can take 18 months to settle and bigger states can take many years. For example, John Wayne’s estate took over 22 years and involved probates not just here in Orange County but also in Nebraska, Washington, and Arizona.
- You can reduce or eliminate the voluntary death tax of 40%. Aretha’s estate of $80 million and her death in 2018 allowed her an $11 million exemption. $69 million will be exposed to a death tax of 40% which will cost her family about $27 million in death taxes. She could have reduced that or totally eliminated this $27 million death tax with proper planning.
- Her three wills are conflicting documents that don’t make any sense. If the family can’t agree, the judge will decide for the family. It’s always best to avoid the expense of going to court and fighting it out with your siblings by being proactive and creating the estate plan that you want in advance.
- Formalize your estate plan with a trust. You can avoid the expense and time delays of court proceedings with proper planning.
- Don’t do handwritten wills. They are messy and confusing. Have a “certified estate tax planning attorney” help you through the process. Lawyers are now specialized just like doctors. There are 15,000 attorneys in Orange County all claiming to be estate tax planning specialist and yet less than one half of 1% have passed a second bar exam after five years of specialization and can actually hold themselves out as a “certified estate tax planning specialist.
- Keep your estate plan current. Review and update your plan every 3 to 5 years. For example, if your power of attorney is over five years old it is powerless because it is “stale.” Neither your bank nor your brokerage house will enforce our of date powers of attorney.