This Is What Will Happen To Aretha Franklin’s Estate

Aug. 22--Aretha Franklin's voice made her the Queen of Soul with riches to match.

So what happens to the fortune she accumulated over a decades-long career?

Because Franklin was divorced and she left no will or trust to manage her assets after her death, the short answer is that her four sons will split her estate, experts say.

Of course creditors will have the chance to make claims on the estate and Franklin had a history of bad debts. If other celebrity estates are any guide, shirttail relatives and long-lost friends could appear looking for a payout. Those questions will be resolved in Oakland County Probate Court, where Franklin's estate has been assigned to Judge Jennifer Callaghan.

Franklin's real estate holdings alone make her a multimillionaire, but it's hard to gauge her net worth without knowing her debts and the value of the rights she retained to the music recordings that made her famous.

Don Wilson, a Los Angeles attorney who represented Franklin for the past 28 years on entertainment matters, told the Free Press this week that the singer maintained ownership of the rights to her original compositions, which include well-known hits such as "Think" and "Rock Steady."

In some cases, Franklin negotiated a portion of the copyright to songs written by others, he said.

"In exchange for her recording it, she got a piece of the copyright," Wilson said.

Wilson said Franklin's catalog hasn't been appraised and it would be hard to immediately estimate its worth.

"It's difficult to really assess what the value of that catalog is," he said. "Catalogs are sold at a multiple of net earnings and that multiple can range anywhere from 10 times to 20 times."

Wilson said some of Franklin's compositions were covered by other artists, but most were retained by her.

"It generated a lot of money, but it generated a lot of money for one particular artist," Wilson said. "It seems like it was always Aretha's version."

Wilson said it's unfortunate that Franklin didn't establish a trust, something he'd urged her to do for years.

"It would have expedited things and kept them out of probate, and kept things private," he said. "I just hope (Franklin's estate) doesn't end up getting so hotly contested. Any time they don't leave a trust or will, there always ends up being a fight."

Franklin was known to defend her rights in court, twice suing filmmaker Alan Elliott for trying to distribute a film made from footage of a 1972 Franklin concert at New Missionary Baptist Church in Los Angeles. She won both times.

Artists like Franklin often see their net worth rise quickly upon death because of nostalgia purchases of their work, said Danielle Mayoras, a Troy-based estate planning attorney who co-authored the book "Trial and Heirs, Famous Fortune Fights," about celebrity estates and the battles they can prompt.

In the hours after Franklin's death Aug. 16, her "30 Greatest Hits" reached the No. 1 spot on the iTunes album chart while her iconic hit "Respect" climbed to No. 1 on songs.

"We might actually see her estate quadruple in size ... because everyone wants a piece of her," Mayoras said.

Other estate battles

When civil rights icon Rosa Parks died in Detroit in 2005, a court battle ensued over her estate, which included memorabilia such as her photographs with presidents, her Congressional Gold Medal, a pillbox hat that she may have worn on the Montgomery bus when she refused to give up her seat to a white passenger, a signed postcard from Dr. Martin Luther King Jr., decades of documents from civil rights meetings and her ruminations about life in the South as a black woman.

Parks had no children and her husband, Raymond, died before she did.

In 1998, Parks created a will and trust leaving her belongings to an institute she founded and to her longtime assistant, Elaine Steele. About 15 nieces and nephews contested the will in a court battle that lasted for years before being settled.

In 2014, a foundation created by Howard Buffett, son of billionaire investment guru Warren Buffett, purchased the items for $4.5 million.

The 2016 death of pop star Prince, who left no will, touched off a legal battle for his fortune, including rights to recordings that the singer kept in a vault without publishing. That battle continues in courts in Minnesota.

Court filings show Franklin's four sons, Kecalf, Edward and Clarence Franklin and Theodore R. White II, agreed to have Franklin's niece, Sabrina Owens, serve as personal representative.

Owens has 91 days to compile a list of Franklin's assets. A notice to any creditors will be published in the Oakland County Legal News. Attorney David Bennett of Bingham Farms is providing legal services to the estate at a rate of $350 per hour, according to a fee agreement filed in court.

Estate taxes

Depending on the size of Franklin's estate, it could be subjected to the federal estate tax. The tax law changes signed by President Donald Trump in December doubled the standard deduction for estates from $5.6 million to $11.2 million, said James Hines, a professor at the University of Michigan Law School who specializes in taxes, estates and trusts.

"The first $11.2 million is exempt from tax," Hines said. "Everything else is taxed at 40 percent and there's no getting out of it."

One notable exception is money or other assets left to charities, which would not be taxed, Hines said.

Many wealthy people pass on money to their heirs through the use of life insurance policies because the payouts typically are not taxed, Hines said. But even those transactions must be carefully structured.

"It's only tax-exempt if it was set up in a totally irrevocable way," Hines said. "The premiums you pay in are treated as taxable (to the beneficiaries)."

Multiple mansions

Deed Records in Oakland County show Franklin owns three homes in Bloomfield Township.

Her main residence is a home in Turtle Lake, a gated community just west of Forest Lake Country Club in Bloomfield Township. Among her neighbors is Detroit Red Wing Justin Abdelkader.

Franklin's two-story colonial style home has 4,700 square feet on the main floors and another 3,100 square feet in the basement, according to Bloomfield Township tax records. The home has three bedrooms, four bathrooms and two fireplaces.

She bought the house on Turtle Pond Court in June 2001 for $1.8 million but its value fell during the recession and tax assessors now list its market value at about $1.3 million.

Franklin owns another Bloomfield Township home on Kiftsgate Bend near Lone Pine and Telegraph roads. That one is valued at $1.2 million, according to township tax records. That home has 4,150 square feet on the main floors, with another 3,150 in the basement. It has five bedrooms, seven bathrooms, three fireplaces and a hot tub.

Franklin owns a third home on Wickford Court in the Fox Hills subdivision near Opdyke Road and South Boulevard. It has 2,200 square feet on the main floors and another 1,154 in the basement.Tax assessors list its value at $270,000.

Franklin owned a fourth home in Bloomfield Township, but sold it in November 2016 to former Detroit Piston Joe Dumars and his wife, Debra, for $625,000.

Franklin also owns a home on Hamilton in Detroit abutting the Detroit Golf Club. Franklin bought that 6,200-square-foot, five-bedroom house in August 1993 for an undisclosed amount. The Detroit assessor's office lists the house as having a market value of nearly $350,000.

Creditors circling

The Free Press reported in 1999 that Franklin had been sued 30 times in the previous decade for unpaid bills. Among those who claimed she didn't pay were dentists, accountants, lawyers, limo drivers, and tax collectors as well as a songwriter, a dressmaker, a music arranger, a moving company, a landscaper, a home inspector and even the guardian for her mentally ill son.

Franklin sometimes paid her debts belatedly, but typically not until a judgment was entered against her.

Then-Wayne County Circuit Judge Harvey Tennen, who represented Franklin years earlier in the 1980s, told the Free Press at the time that Franklin handled her own finances and was overwhelmed by them.

"She's a wonderful artist who shouldn't be handling her own business, but she does," Tennen said. "She just doesn't have time for it and she doesn't realize the kind of bad press she gets from not dealing with things like that. She needs a manager, she needs a lawyer, she needs professionals. But she usually doesn't talk to them until it's too late."

That kind of attitude isn't uncommon among celebrities,Mayoras said.

"People do have a fear of professionals," Mayoras said. "We've seen it with other celebrities."

Earlier this year, Franklin forfeited two Bloomfield Township homes to the Oakland County Treasurer for delinquent taxes only to redeem them a month later when she paid $19,000 and $11,355, respectively.

Last year, Franklin forfeited the third house before paying $8,650 to redeem it.

In November 2017, the State of Michigan placed a lien on one of her homes, claiming Franklin owed $27,293 in unpaid income taxes.

Public records in Oakland County show some creditors still seeking payment from Franklin.

In January 2013, Bowen Paving Inc., placed a construction lien on one of Franklin's Bloomfield Township homes, claiming it was owed $4,743 for paving work. The asphalt supplier on the job, Ajax Materials Corp., added another lien, claiming it was owed $1,449 for materials.

Other creditors may not have filed liens, but still could attempt to collect.

"Any creditor can come out of the woodwork and file a claim," Mayoras said.

Contact John Wisely: 313-222-6825 or [email protected]. On Twitter @jwisely. Staff writer Jennifer Dixon contributed to this report.

___

(c)2018 the Detroit Free Press

Visit the Detroit Free Press at www.freep.com

Distributed by Tribune Content Agency, LLC.