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Lack of communication and clarity in estate planning can lead to problems for surviving spouses and family members. Wealth Strategist Ben Rizzuto discusses best practices to help ensure your bequest intentions are met.
The death of beloved celebrities provides us with an opportunity to remember their work, reminisce about the role they played in our lives and, in many cases, witness the trainwrecks that are their estates.
While these stories provide fodder for entertainment news outlets, they also provide some essential lessons about estate planning and wealth transfer.
Aretha Franklin’s passing is one recent case in which a family’s wealth and estate issues have played out in the public view. The Queen of Soul died in 2018 in Detroit, Michigan. She left a substantial estate along with three handwritten testamentary documents. Two were found in a locked cabinet, the other in a spiral notebook under a couch cushion.
Each document contained different stipulations regarding Franklin’s wishes and the division of her assets. The ensuing family conflict lasted four years, created significant family infighting, led to the publication of several family secrets, and resulted in substantial costs that decreased the value of the estate.
Many articles have estimated the value of Franklin’s estate over the years, but that’s not as important as the value of that little piece of paper – her will. I often think about the heartache and money that would have been saved if some time and planning had taken place before the singer’s death to create and communicate a plan for distribution upon her death.
Aretha Franklin’s unfortunate story provides a lesson we should all take to heart: If you haven’t formally addressed your estate plan, do so as soon as possible. If you have, make sure those it impacts know where it is. Children, family members, financial professionals, your attorney – all these individuals should know the location of your estate planning documents, whether they’re in your safe, your desk drawer, or under your favorite couch cushion (not recommended).
When it comes to creating a will, the best practice is to seek an attorney’s advice. Doing so will help ensure it conforms to your state’s laws, reducing the potential for questions or conflict. But while that’s the best practice, we can see from the Aretha Franklin case that this doesn’t always happen.
For handwritten (or holographic) wills, state laws dictate the requirements that must be considered. Often such wills do not have to be witnessed or notarized, and they can be drafted easily … even while sitting on the couch. But while easy and cheap, written wills can be problematic since they can be hard to read, vague and – most importantly – difficult to validate, which can lead to complications in probate court. In short, a written will may create more problems than it solves!
Currently, 35 states have laws in place that allow for the recognition of a handwritten will. Each of these states may have different rules on holographic wills, and the interpretation of those rules may be viewed and adjudicated differently based on the individual court and judge overseeing the probate process.
Interestingly, a recent case in Mississippi looked at the validity of a holographic will that had been written on an iPad. The main asset in this case and estate was the family home, which needed to be refinanced, but the surviving spouse was having difficulty doing this due to lack of cooperation from the decedent’s children.
While the home may be small potatoes compared to the Aretha Franklin estate, we can see how lack of communication and clarity around these details can lead to problems for surviving spouses and family members.
Even though this e-will was not very detailed, the judge in Rankin County, Mississippi accepted it as valid, allowing its terms to control the distribution of assets. Depending on the state, the court, the judge, and the information contained or not contained in the will, someone else may have seen a different outcome.
The main point here is that you don’t have to be a world-famous singer or have great wealth to have a will. The legal battle over Aretha Franklin’s estate highlights several best practices we should all consider incorporating as we prepare our own estate plans:
If you’d like more details on this process or are interested in resources to help clients develop their estate plan, explore our Foundations of Estate Planning guide. It covers everything from starting the planning process to how to conduct a family financial meeting. You can also access additional client educational materials through our Connect with your clients resource.
The information contained herein is for educational purposes only and should not be construed as financial, legal or tax advice. Circumstances may change over time so it may be appropriate to evaluate strategy with the assistance of a financial professional. Federal and state laws and regulations are complex and subject to change. Laws of a particular state or laws that may be applicable to a particular situation may have an impact on the applicability, accuracy, or completeness of the information provided. Janus Henderson does not have information related to and does not review or verify particular financial or tax situations, and is not liable for use of, or any position taken in reliance on, such information.