Dolly Parton from Meet the 82nd Annual Peabody Awards Presenters in May 2022.
I had this month's column all planned out, and all I needed to do was commit it to paper. But then Dolly Parton died.
The passing of the "Queen of Country" is still fresh as I write this, and there is not a great deal of information available, but what we know so far is encouraging. Dolly had said that she did not want to leave a mess for her loved ones after she was gone, and it appears likely she didn't.
Dolly Parton was one of the most generous and, according to just about everybody who ever met her, kind people on the face of the earth. She started from very humble beginnings, being one of 12 children born in a one-room shack in Appalachia. Her first guitar was homemade. Her song "Coat of Many Colors" about wearing a coat made from rags, was autobiographical.
And yet, perhaps surprising given her well-known charitable streak, she was a very shrewd businesswoman. Here's my favorite example. Early in her career, when she was just coming off being a featured performer on a country-western TV show, she wrote a song called "I Will Always Love You." She had a minor country hit with it. Then she was approached by Elvis Presley's manager, the so-called "Colonel" Tom Parker.
At first, she was thrilled. If Elvis recorded her song, it would be a huge pop hit, and there was a lot more money there than in country music. Keep in mind that this was before her movie career or her other crossover hits. But Parker had a particular stipulation which he insisted upon whenever Elvis wanted to record a song. The writer of the song had to sign over half of the royalties. When someone writes a song, they get a certain amount each time that song brings in money. In order to have Elvis record her song, she would have to give up half of the money she would otherwise be getting.
Dolly stuck to her guns, and Elvis did not get to record her song. But years later, Whitney Houston recorded it, and not only took it to No. 1 on the pop charts, but held it there for 14 weeks, a record at the time. And Dolly got her full royalties for that.
She was remarkably generous. Her Imagination Library provided millions of books to young people. That was a charity she founded in honor of her father, who was illiterate. She provided incentives for children in poor areas to stay in school. She funded college scholarships. When the COVID-19 pandemic hit, she donated a cool $1 million to medical research. And no doubt most of her charitable endeavors were private; it was discovered, after many years, that she had been quietly providing band uniforms to a couple of underfunded schools.
But even with all that giving, her estate is estimated at somewhere between $450 million and $650 million. So what about taxes? Dolly's husband died about a year before she did, and she never had children. The first $15 million of her estate will be exempt from the federal estate tax, which is a 40% tax on everything over that amount. So, using a middle range of $550 million and subtracting the exempt amount, her estate would be paying around $214 million in taxes. Right?
Nope, not likely. First of all, I expect she doubled up the exemption, either by filing an estate tax return for her husband after he died or accomplishing the same thing through split trusts. After her husband died, her primary home was transferred from one trust to another, which is fairly common when doing those sorts of estate plans.
Beyond that, there is another exemption beyond the personal exemption. Anything left to a charitable organization does not count. So Dolly could easily leave $30 million to her relatives, and the rest to the various charitable organizations she favored, and there would be no estate tax at all. In fact, through the judicious use of various types of charitable trusts, she may have exempted even more for her relatives.
I expect we will see more about Dolly Parton in the news in the coming months and years. There is apparently a plan to name the Nashville airport after her, and most likely there will be other honors as well. I do not expect that we will see stories about fights over her estate plan though. And that is exactly how it should be.
Kenneth Kirk is an Anchorage estate planning attorney. Nothing in this article should be taken as legal advice for a specific situation; for specific advice you should consult a professional who can take all the facts into account. And pour yourself a cup of ambition. Yeah, it doesn't really fit, but it's my favorite Dolly Parton line so I had to get it in there.
