Aretha Franklin’s Estate Signs Tentative Deal Over Back Taxes Owed
AdvertisementContinue reading the main storySupported byContinue reading the main storyAretha Franklin’s Estate Signs Tentative Deal Over Back Taxes OwedWhile the estate continues to dispute the amount sought by the I.R.S., it has agreed to pay or put aside the bulk of its earnings from royalties and other revenue streams.Aretha Franklin’s estate will set aside 45 percent of all revenue it receives to pay off the tax liability she accrued from 2010 to 2017.Credit…Ross Marino/Getty ImagesMarch 2, 2021The estate of Aretha Franklin has reached a deal with the Internal Revenue Service to pay off millions of dollars in federal income taxes that the singer owed during her life, resolving a major financial issue that has been hanging over the estate since Ms. Franklin died in 2018.Under the agreement, which must be approved by the judge overseeing Ms. Franklin’s probate case, the estate will set aside 45 percent of all revenue it receives from now on to pay off the tax liability that Ms. Franklin accrued from 2010 to 2017.An initial payment of $800,000 is to be made to the I.R.S. within five days of the deal’s approval by the judge, Jennifer S. Callaghan of Oakland County Probate Court in Michigan, according to the document submitted in court on Feb. 19. It was signed by the estate’s executor and lawyers for Ms. Franklin’s four sons, as well as by a legal officer at the I.R.S.The document reports the I.R.S.’s claim against the estate as totaling $7.8 million, but that figure apparently does not reflect about $3 million that the estate already declared that it paid at the end of 2018.The deal also lays out a plan as to how the estate will handle ongoing taxes and payments to Ms. Franklin’s heirs. The agreement says 40 percent of the estate’s revenues — which are generated by Ms. Franklin’s music royalties and licensing, as well as from Hollywood productions like a biopic starring Jennifer Hudson — will be held in escrow. That money is being set aside to cover state and federal taxes owed by the estate, as well as estimated taxes owed by heirs.The remaining 15 percent of the revenues are to be used to cover the estate’s administration costs, up to $1 million — any income beyond that point will be paid out in equal amounts to Ms. Franklin’s sons: Edward, Kecalf and Clarence Franklin, and Ted White Jr. The deal also calls for those four men to be paid $50,000 each within five days of the stipulation’s approval.If approved, the deal would remove one of the estate’s biggest hurdles and allow some income to flow regularly to Ms. Franklin’s heirs, even though a detailed plan for the distribution of her assets remains a matter of dispute.The value of Ms. Franklin’s estate has not been decided, but some estimates range as high as $80 million.Since her death, and the discovery of multiple wills she created, there has been disagreement and court fights about exactly who are her heirs, and what were the famed singer’s final wishes in providing for her family.Initially, when Ms. Franklin died in August 2018, at age 76, her family believed she had left no will. Lawyers who represented her said they had tried in vain to get her to write one. Under the law in Michigan, Ms. Franklin’s longtime home, that meant her estate would be divided equally among her children. Ms. Franklin’s sons unanimously nominated a cousin, Sabrina Owens, a University of Michigan administrator who was close to Ms. Franklin, to be the estate’s personal representative, or executor.But nine months later, while going through Ms. Franklin’s Detroit home, Ms. Owens found handwritten documents — one of them was in a spiral notebook under the sofa cushions — that appeared to be two wills. In them, Ms. Franklin criticized various people in her life, including a lawyer, an accountant and the father of one of her sons, and specified how her assets should be split up among her children and grandchildren — in some cases, giving her descendants less money than they would have received if there was no will.That discovery immediately divided Ms. Franklin’s family, with some of her sons asking the court to favor one document or another, and led to the removal last year of Ms. Owens as the estate’s personal representative. She has been replaced by Reginald M. Turner, a Detroit lawyer who is the president-elect of the American Bar Association. Mr. Turner declined comment, saying it would not be appropriate for him to discuss estate matters.The question of whether Ms. Franklin’s wills are valid, and, if so, which of them would govern her estate, is set to be litigated at a trial scheduled to begin in August.The estate is still disputing the tax bill and the agreement with the I.R.S. specifies that if the estate is successful in arguing that a lesser amount is owed, any overpayments would be returned for distribution to the heirs.AdvertisementContinue reading the main story More
