The “Queen of Soul”, Aretha Franklin, passed away last month without a will. I repeat. Aretha Franklin passed away without a will. That is amazing to me. How could a pop icon with so many decades in the music industry not take the time to plan her estate?
Allegedly, her estate is worth in excess of $80 million. I am not sure how anyone knows that, but the estate will have to go through the long-drawn-out probate process. Ms. Franklin was divorced and has four sons, who should inherit the estate. It is estimated that with some tax and estate planning, she could have saved her beneficiaries $27 million in estate taxes.
As a CPA/Financial Planner, it is part of our responsibility to our clients to not only prepare taxes but to look at the overall financial planning picture. Ms. Franklin’s estate should have been valued on a regular basis by a certified valuation expert who specializes in intangible assets such as music royalties, including digital streaming royalties that go on long after her death. This could have saved an enormous amount of time and money.
Now, I know this is an unusual case and a lot of our clients are not affected by Federal Estate taxes and music rights. The exemption amount before you pay any estate taxes is $5.6 million for individuals and $11.2 million for married couples for 2018. However, there are ways to avoid the probate process, transfer assets before or upon death and lower estate costs and taxes. Remember, states may have much lower exemption amounts, which may come into effect on less valued estates.
Just a reminder, that as CPAs and Financial planners, it is our responsibility to look at the whole financial picture of our clients, not just income taxes and investments.
by 