How To Avoid An Ali-Sized Estate Battle

An estate battle is looming on the horizon for the family of boxing champion, Muhammad Ali. Muhammad Ali was accustomed to fighting during his life – whether in the ring, against the government or with Parkinson’s disease – but it appears that the greatest fight is reserved for his estate. The circumstances are ripe for an estate battle.  Muhammad Ali fathered nine recognized children (including his adopted son from his most recent marriage) over the course of four different marriages.

The Estate Battle Over Muhammad Ali’s Fortune

There is the fact that so much is at stake.  Initial reports are that Muhammad Ali’s fortune ranged between $50 million and $80 million.  But that could just be the start.  As Entertainment Tonight reported, the value of the champ’s fortune could increase dramatically now that he is gone, just as happened with Elvis Presley, Michael Jackson, and Whitney Houston. Ali and his wife Lonnie owned property in Arizona and Kentucky, and last year they sold a home located outside of Philadelphia for $690,000 that he lived in to train for some of his most dramatic fights.  Furthermore, it’s unknown what type of memorabilia the legend has that could potentially be sold for millions of dollars by his family.

estate battle, wills, will challenges, inheritanceThe rumblings of the estate battle have already started, even before the will and other estate planning documents are found. It has been reported that Ali’s only known biological son, Muhammad Ali, Jr., has been disgruntled ever since his father married Lonnie, wife number four, in 1986.  Ali, Jr., claims that Lonnie cut him out of his father’s life and rarely allowed him to visit.  Ali, Jr., was living in poverty and is now trying to sell a tell-all book in hopes of cashing in on the difficult family dynamics.  He is also contemplating filing a court proceeding in the hopes of receiving an inheritance. He claimed the champion had seen his two granddaughters only once and that he was having to raise them in a two-bedroom flat, unable to pay electricity bills and accepting charity donations of food. In interviews in recent years the boxer’s son claimed “there is one thing she can’t change – his will. She can’t change where he wants all the money to go.”

Muhammad Ali’s second wife, Khalilah Camacho-Ali, recently gave an interview, in which she said that she had to protect Ali from paternity suits during their marriage, comparing him to Tiger Woods and Arnold Schwarzenegger. She expects claims by illegitimate children to swamp Muhammad Ali’s estate, saying, “They’re going to come out of the woodwork like roaches.”

Also in the mix for a potential estate battle is the champion’s brother Rahaman Ali, 72, who had previously publicly claimed in a US magazine that Lonnie had cast him out, and worse, although he later said he was misquoted.

Inevitably, Ali’s life was complicated by claims he fathered other children. They included Kiiursti Mensah Ali, now 35, whose mother claims she had a 20-year affair with the boxer which started when she was 17.

Muhammad Ali is believed to have created a will, and perhaps other estate planning documents, placing his fourth wife, Lonnie, in charge of his estate.  This makes sense considering she is widely recognized for having helped manage his financial and business affairs throughout their marriage. They married in 1986 and Lonnie became Ali’s full-time carer. But her motives for such self-sacrifice remain hotly debated within the family.

Some people are adamant that Lonnie rescued Ali, others say she poisoned his relationships with the rest of his family, many of whom were seen as spongers leeching money off him. Ali Jnr, as well as the boxer’s brother, are seen in this category.

Both his brother Rahman and Muhammad Ali Jnr, the boxer’s sole biological son, have already accused others in his extended family of being anything but ‘humanitarian’ towards them, cruelly leaving them in varying degrees of financial hardship as Ali and his controlling fourth wife, Lonnie, lived in the lap of luxury.In recent years, Ali Jr says that when he phoned his father, his calls would either not be answered or he would be told his father was busy. Although he’s in touch with his sisters, they never discussed their father, he said. Ali Jr claims they are also angry at Lonnie but are too scared to say anything.

Aged 72, Rahman was a member of his brother’s entourage throughout Ali’s boxing career. In return, Ali is said to have helped him with alimony payments to some of these ex-wives and allowed him to move into a house he bought for their mother after she passed away.

Yet this largesse ended when Lonnie took over the purse strings, forcing Rahman into a modest Louisville flat. Rahman has reportedly vowed to fight ‘tooth and nail’ in court to ensure he and all Ali’s children receive a share – which is now likely to soar in value.

estate battle, will, trust,If Ali did indeed have a will, how his estate will be distributed among his nine children may be cause for a further estate battle.

Estate disputes between children from prior marriages and the surviving spouse are the most common source of trouble in courts across our country.  Add in the reality of Ali’s long-standing struggles with Parkinson’s disease — which can have not only physical effects but mental, as well — and there is a strong possibility that unhappy heirs may file challenges in court.

How To Avoid An Estate Battle

There are no guarantees that there won’t be an estate battle after your death, but there a number of things you can do to avoid this outcome. There are a few basic issues of which to be aware:

If you die without a will your assets are distributed according to the intestacy rules in your state.

When you marry, any previous will becomes invalid.

De facto/domestic partners are usually entitled to a share of your estate when you have lived together continuously for two years.

The family home transfers directly to your surviving spouse or partner unless you own it as tenants in common.

Superannuation does not form part of your estate, so put in place valid death benefit nominations.

In more complicated circumstances (such as Ali’s), a testamentary trust can be a useful vehicle for blended families. It is established in a person’s will and activated after their death and can be used to hold assets including property and investments. A fairly simple strategy in that situation might be that you give a life interest to your surviving spouse under your will in relation to all or part of your estate. Then once he or she passes away or remarries, the capital can go to the children from the previous marriage.

Another option is to have mutual wills. A common concern is how children from a previous marriage will be treated by a surviving spouse. A mutual will is a separate agreement to ensure there are consequences if a surviving spouse changes their mind after someone has passed away.

Leaving unequal shares of your estate to children or stepchildren will often lead to an estate battle. Keeping a signed statement of intention may allay such a challenge.

Most people do not realise that superannuation generally does not form part of someone’s will. It is not directly held by an individual so you need to ensure that your death benefit nomination is up-to-date. If not – the trustee has the power to decide what happens with your super.

Good communication is key to all healthy relationships. Although it may be difficult, the first step is to have an honest conversation with a new spouse about existing finances, goals for the future and how you expect your assets to be distributed. If children are old enough then bringing them into the conversation may be a valuable move. Putting everything on the table may be uncomfortable, but avoids conflict for blended families later on.

If you need to talk to a specialist in wills and estates, contact us today. We offer a free, 10-minute phone consultation.