R-E-S-P-E-C-T Find Out What It Means To…Your Estate Plan

While this week’s article wasn’t intended to be the third in a series, resolution of Aretha Franklin’s Estate merited examination, particularly because of the various Estate Planning issues raised both during the pendency of the proceeding and with its final resolution.

Aretha Franklin died on August 13, 2018, at age 76. At the time of her death, she was unmarried and had four sons, Clarence, Edward, Ted, and Kecalf. Aretha’s family believed that she died without any Will or Revocable Trust. In other words, she died intestate which meant that the laws of the state of her residence would determine distribution of her estate. Michigan laws required distribution of her estate equally among her sons, one of whom has special needs.

Aretha’s sons unanimously selected a cousin to serve as the estate’s personal representative, the individual responsible for distributing the late singer’s estate. While clearing out Aretha’s home, her niece found two different handwritten documents, portions of which were illegible, that expressed conflicting testamentary directions. Aretha failed to execute either of those documents with the requisite formalities for a Will, no one witnessed the creation of these “Wills,” and no attorney prepared the documents, although a notary signed one. An expert confirmed that all documents were in Aretha’s handwriting. In addition, one of her sons obtained a draft Will along with Aretha’s handwritten notes from a law firm Aretha allegedly had engaged to help her complete her Estate Planning and submitted those documents to the probate court.

A Michigan jury ended four years of family conflict when it decided what Aretha’s family could not – that a four-page handwritten document found in her couch represented her true testamentary intent regarding division and distribution of her estate. This case demonstrates clearly that truth is often stranger than fiction. The simplified recitation of the facts of Aretha’s case alone raises enough issues to qualify for a law school exam. First, it raises the issue of intestacy. Each state has a statutory scheme that governs distribution of the estate of a resident who dies intestate. Unfortunately, these laws disregard the needs of the individual recipients, including those who may have special circumstances, such as receiving governmental benefits. As noted above, one of Aretha’s sons has special needs. If the case had proceeded on an intestate basis, each son, including the one with special needs, would have received an equal ¼ portion of Aretha’s estate, outright. If the son with special needs were receiving government benefits, receipt of the inheritance would have disqualified him from those benefits. By determining that the document found constituted a Will, the jury helped Aretha’s sons avoid that result.

Probate represents yet another area of concern. If an individual dies with only a Will or without any Estate Planning documents, then that individual’s estate needs to go through probate. During the probate process, the executor or personal representative obtains the legal authority to distribute the decedent’s assets to the proper beneficiaries. Probate requires court oversight, costs money, and takes time. In addition, the probate process allows anyone, even those unrelated to the matter, to learn about the estate, its beneficiaries, and other facts that the family probably prefers to keep private. Most individuals who understand the probate process choose to avoid probate of their estate by creating and funding a Revocable Trust during their lifetime. The Revocable Trust contains provisions that direct a successor Trustee on how and under what circumstances to distribute the assets held in the Trust to the beneficiaries upon the death of the individual who created the Trust. The successor Trustee need not obtain permission from a judge before making these distributions, generally need not spend additional funds on the process, and usually can make distributions shortly after the death of the decedent, all while keeping private matters private. Unfortunately, Aretha’s family could not avoid probate because her assets were not in a Trust and would pass either pursuant to a Will or the laws of intestacy. Determining which “Will” would govern distribution of Aretha’s assets caused a four-year delay in receipt by her sons while subjecting them to public scrutiny of these private matters.

Finally, we see the problem of “holographic” or handwritten wills. A handful of states such as Alabama, Connecticut, Iowa, Washington, and Wisconsin refuse to recognize a holographic Will. Others like Florida, Illinois, Missouri, New Hampshire, and Wisconsin may accept a holographic Will if the document otherwise meets the statutory requirements for a valid Will, including witness and notary requirements, which seems to undermine the goal of creating a holographic Will. Thankfully, Aretha resided in Michigan, one of several states that recognizes holographic Wills. Of this majority of states, some require that the Testator write the entire document, while others, like Michigan: Section 700.2502 require that the Testator write only the substantive provisions dictating who receives what property.

Celebrity estates demonstrate the myriad of issues that arise when an individual fails to undertake Estate Planning or tries to complete this important task on their own. As this article has demonstrated, holographic Wills, along with any self-created document, complicates, rather than simplifies, an estate. It’s important to speak with a qualified Estate Planning attorney (Me!) regarding your Estate Plan and your unique circumstances. Had Aretha created a Revocable Trust, she would have given her family the privacy to work through their issues, even if they disagreed about the terms of the Revocable Trust. Save your family the time and expense that Aretha failed to save hers, and make sure that I guide you through the creation of your Estate Plan. Your family will have nothing but R-E-S-P-E-C-T for you when you do.