Aretha Franklin’s estate revealed it has paid off a $7.8 million IRS debt. This now paves the way for the four sons of the late Queen of Soul to finally take over control of the estate.
Franklin, who died of advanced pancreatic cancer on Aug. 16, 2018, owed millions to the IRS and this held up her heirs receiving the full estate, which was estimated at $80 million at the time of her death. That estimate includes the value of her likeness, music catalog and royalty stream.
Franklin also owned a large portfolio of property, stocks and other assets, which, in May 2019, her lawyers opted to liquidate, Celebrity Net Worth reported.
Following her death, the IRS claimed she owed nearly $8 million in unpaid taxes, penalties and interest had piled up during the previous seven years.
IRS Payment Plan
In April 2021, the estate made a deal with the IRS, arranging a payoff schedule as well as regular payments to Franklin’s sons. The IRS deal set aside 45 percent of Franklin’s incoming revenue to make payments against the outstanding tax balance. Another 40 percent was put into an escrow account to handle taxes on newly generated income. The remaining 15 percent is to be used to cover the estate’s administration costs, up to $1 million, The New York Times reported. All income beyond that point will be distributed in equal amounts to Ms. Franklin’s sons (Edward, Kecalf and Clarence Franklin, and Ted White Jr.).
And, on June 17, the balance of the tax liability was paid off, according to the new court petition filed by attorney Reginald Turner, personal representative for the estate, USA Today reported.
Leave No Debt Behind
More than 70 percent of Americans have debt at the time of their death, according to data from credit bureau Experian. The average total debt is $61,554, Newsweek reported. African- Americans have high debt balances.
On average, Black families owed $8,554 in consumer debt in September 2019, compared to $4,148 for Hispanic families and $5,590 for families of other races, Forbes reported. While White families had a high debt at $32,838, they also held a lot more assets such as cars to offset that debt.
And debt often beomes an issue upon death in the Black community.
“Stop passing debt,” Martina Jimenez Sperry, executive director, market director, wealth, JPMorgan Chase Bank, N.A, said at the Finurah Wealth Summit. “Leave assets.”
“I see in my industry being in financial services [that] in our communities we keep passing on debt, liabilities. People die and they don’t even have enough money to be buried..we have to stop doing this,” she stressed. “No one wants to lose their loved one and inherit their liabilities, their debt.”
Among the way to not leave behind a legacy of debt, said Sperry, is to have larger life insurance policies and to do estate planning, which means making sure you have an up-to-date will.
Will, or No Will
Initially Franklin’s family believed she had left no will, but it turned out that she actually had multiple wills. Nine months after her death, a relative found a will while going through Franklin’s Detroit home. There were various handwritten documents. In particular, a spiral notebook found under the sofa cushions included two wills, The New York Times reported.
Then two more wills turned up. One had been prepared by a Troy law firm in 2017, but was not signed by the star, USA Today reported.
The wills all contained conflicting instructions about Franklin’s wishes for her estate. A trial was set up to made the final conclusion.
While it is advisable to register your will with the your local probate court, there is nothing in the law that requires a will to be registered for it to be valid, according to insurance firm Bequest.