Did Aretha Franklin’s Niece Mismanage her Estate?

Allegations of “gross mismanagement” by Ms. Franklin’s niece and her attorney were heard in the Michigan Courts this week. Allegations include excessive legal and Administrator fees, improper management of high value assets, failure to properly account for estate funds, and lack of communication with the heirs and beneficiaries. Because this is Aretha Franklin’s estate, “excessive fees” are upwards of half a million dollars and estate assets include (but are not limited to) a fleet of cars and nearly a million dollars in uncashed checks. Failure to properly account is also a huge issue here, as a complete legally compliant accounting would show any additional mismanagement of estate funds. Lack of communication is always a problem in estate and trust matters alike, because it leads beneficiaries to think that something fishy is going on – even when it may not be.

Just prior to this week’s court hearing, Sabrina Owens, Ms. Franklin’s niece and the Estate Administrator, resigned from her position. In her Petition to the Court, Ms. Owen’s stated that her reason for resignation was because it had “become more contentious with the heirs.” Ms. Franklin’s son Kecalf Franklin has been vying for control of the estate for months now – both through the Court and through repeated social media posts.

Disagreement among heirs and beneficiaries is unfortunately all too common, particularly when emotions are running high after the passing of a family member. And with so much money at stake here, it’s no wonder beneficiaries are asking questions about how the estate has been handled.

As an attorney who frequently handles litigated probate (estate) matters, my question is not if Ms. Franklin’s niece mismanaged the estate — my question is:

Who advised Ms. Owens that becoming administrator of a multi million dollar estate with massive income potential and a large number of beneficiaries made any sense to begin with?

With such a vast and complicated estate, any good probate lawyer could tell you it would be a minefield for an inexperienced Estate Administrator – or even an experienced Professional. The estate not only has millions in assets, three conflicting holographic wills, and multiple beneficiaries, but it’s also at the helm of multiple business endeavors. And, perhaps most relevant – it has a beneficiary who is also vying to become Administrator (Kecalf).

Now, in many respects, Ms. Franklin’s estate is not like the average probate one sees in the California courts. For one, there are reportedly over $17 million in assets and the estate is managing multi million dollar business deals. Despite those more unusual qualities, the singer’s estate does share some important qualities with many litigated estates in the California Courts:

1. Disagreement Over Who is Administrator

2. Disharmony Between Heirs/Beneficiaries

3. Multiple Wills

4. Potential Asset Mismanagement

To effectively open an estate and begin the probate process so that funds can be distributed, the Court must appoint someone to act as Administrator. In California Courts, this person is called an Executor if they are named in a Will, otherwise they are generally referred to as the Estate Administrator. In many cases, family members cannot agree who should act as Administrator. At this stage of the probate, beneficiaries and heirs can get stuck, and if they’re not careful – potentially drain large amounts of the estate in attorney fees. They can also significantly delay the distribution process, hence putting off the very reason they opened the estate – to get money.

Disagreement among Ms. Franklin’s heirs became public knowledge early on in the process, and was in full display by May of last year, after three separate holographic wills were discovered in her home. At that point, Ms. Owens and her attorney ostensibly had the choice of either forging ahead, resigning completely, or working with all parties to bring in a neutral, professional Estate Administrator.

When serious disagreement exists over who should act as Administrator and how the estate should be distributed, this is the point at which the advice of an experienced and highly ethical attorney is crucial. By highly ethical I refer to the fact that the attorney must be one who can put their own self interest aside. This is because if the value of the estate is fairly high, the attorney for the Administrator is positioned to make significantly more money than he or she would if the client decided not to be Administrator. This can be true in terms of the Statutory fees they may miss out on, and also potentially the hourly fees associated with representing their client through a litigation over who should act as Administrator.

In the case of Ms. Franklin’s estate, if the estate were in California, the Administrator’s attorney would be basing a portion of his or her fees off of the estimated $17 + million dollars in the estate. Sabrina Owen’s attorney would have every reason to encourage her to act as Administrator. Ms. Owens herself would also be highly motivated to act as Administrator, because she too would be reaping in large fees for her role. This is not to say that this was Ms. Owens and her attorney’s motivation. Both were apparently very close with Ms. Franklin and I cannot attest to exactly how Michigan Probate Attorneys and Administrators are compensated.

Nevertheless, in California, Administrator and Administrator Attorney Fees are a factor that should never influence an attorney to encourage a client to be Administrator when it is not in the best interest of all involved.

In my personal practice here in California, I strongly encourage clients to consider a neutral third party Estate Administrator when serious conflict exists between heirs of an estate. Even if the conflict exists outside of the issue of who acts as Administrator, the mere existence of strife between heirs and beneficiaries can impede the ability of a probate case to move forward. Additionally, even if a client chooses to move forward with becoming Administrator in a contested matter, often times the Judge will appoint a professional administrator down the line. If that happens, the client will have already spent an unknown sum of money on attorney fees, and wasted a large amount of his or her own time fighting unnecessarily.

So what is the bottom line here?

1. Think long and hard before agreeing to become Administrator or Executor of an Estate that will potentially be contested.

2. Avoid a big fight over who acts ad Administrator when at all possible.

3. Hire an attorney who has significant experience in the Probate Court of the County the probate will take place in.

4. Hire an attorney who has a balanced approach to your situation and can provide you with several options and likelihoods of how those scenarios will play out.

As for Ms. Franklin’s estate, we shall all just have to wait and see what happens….

For questions about Probate and Probate and Estate Litigation in Contra Costa or Alameda County, contact our Trust and Estate Law Office at 925-322-1795.