Ethan R. Okura
Hawai‘i Herald Columnist
Just over two years ago, I wrote a column about Prince, the musical legend, and how he passed away without a will. I detailed some of the problems that his estate would face — and continues to face to this day — because he did not adequately prepare for the end of his life.
As of April 2018, Prince’s six heirs had not received one shiny penny. On the other hand, the bank acting as executor of Prince’s estate and its team of lawyers had already collected $5.9 million in fees and expenses — and had requested that the court approve awarding them at least $2.9 million more for their work on the case.
Court documents estimated Prince’s estate to have been worth approximately $200 million — about half of that will ultimately go to the Internal Revenue Service and the state of Minnesota for estate taxes. So, there may be very little left for each heir when all is said and done.
Well, history repeated itself last month when the “Queen of Soul,” Aretha Franklin, passed away, joining the “chain of fools” who died without a will or a trust. Aretha’s estate is believed to be valued at $80 million. Her four sons are named as potential beneficiaries of her estate in documents filed in a Michigan probate court. They can “Say a Little Prayer” that there won’t be any legal battles as there have been with Prince’s estate. Nevertheless, Aretha’s estate will pay the IRS about 40 percent of the amount over the $11.8 million in estate tax exemption available in 2018. Besides court and legal fees, that’s an estimated $27.5 million. If I were Aretha, I’d be “Rolling in the Deep” about having to pay such a large sum in unnecessarily taxes due to poor planning.
Aretha Franklin was very private about her financial affairs. I imagine that if she had known that she was about to pass away as a “Natural Woman,” and that her finances would all become a matter of public record in probate court, and that her estate would also have to pay about $34 million in taxes, that there “Ain’t No Way” she would have continued to “Rock Steady” without doing appropriate estate planning — and, especially so since one of her heirs, Clarence, has special needs. One of her lawyers even tried to get her to create a will and a trust, but she never followed through.
Now that Prince’s and Aretha’s heirs and executors are trying to build a probate “Bridge Over Troubled Water” to settle their estates, hopefully, their heirs will still end up with a decent inheritance and preserve the “R-E-S-P-E-C-T” that these famed musical icons rightfully earned during their esteemed careers.
If you follow in their footsteps, it’s possible that your intended beneficiaries may not get the inheritance that you wanted to leave them. There may be long delays before your heirs receive anything. Feuds might break out among your family members. And, even if you don’t have enough assets to incur an estate tax, your financial information will all become publicly available. If you have a child with special needs (or who develops disabilities later in life), she or he may end up losing government benefits that they might otherwise qualify for when inheriting assets directly from your estate instead of protected in a special needs trust.
A 2017 study found that 60 percent of adults don’t even have a will or a living trust. This figure includes 64 percent of Generation X, and 42 percent of baby boomers! Asked why they hadn’t even done the basics, the most common answer was: “I haven’t gotten around to it yet.”
This data is on par with what we see among new clients coming to our law firm. Don’t become one of these statistics. If you have been putting it off, see an estate planning lawyer right away to get the process started.
© OKURA & ASSOCIATES, 2018
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Ethan R. Okura received his doctor of jurisprudence degree from Columbia University in 2002. He specializes in estate planning to protect assets from nursing home costs, probate, estate taxes and creditors.
This column is for general information only. The facts of your case may change the advice given. Do not rely on the information in this column without consulting an estate planning specialist.
See more articles by Ethan by visiting https://okuralaw.com/blog/
