Learning from a Legend: Lessons in Estate Planning from the King of Pop, 07-15-2009
On June 25, 2009 the death of a legend shocked the world. Michael Jackson, the King of Pop and one of America’s greatest musical legends, passed away unexpectedly at 50 years of age. Almost immediately the airwaves, magazine stands, and televisions were plastered with information regarding his death and what would become of his children and his multi-million-dollar asset base. Speculation arose immediately that Jackson had no form of estate planning, but after a few days, a will written in 2002 was brought to the surface.
The Jackson Will: While creating a will may sound standard, nearly 70% of Americans do not have this most basic and necessary form of planning. In creating a will, Michael Jackson was able to put in place important stipulations for the distribution of assets and guardianship of his children. His will attributed 40% of his estate to his children, 20% to his mother, and 20% to charity. Jackson also designated custody of his children to his mother, Katherine Jackson, and named as secondary guardian his life-time mentor and friend, Diana Ross.
Had Jackson not created a will, the state would have simply split his assets evenly between his children according to California law. As for the care and custody of the children, this too would have been completely in the hands of the court. Having a will in place helped Jackson ensure that his basic wishes would be carried out and that all his additional assets would “pour-over” into his trust.
The Michael Jackson Family Trust: There has been great confusion on the details of Jackson’s trust planning. However, the truth of the matter is that Jackson did not create a revocable living trust during his lifetime. If he had, the details of his will would not have been made public as the will would have existed within the trust, maintaining privacy on the details of the estate.
Without a revocable living trust, the estate does not have many important protections available, such as savings on taxes, protections against creditors, debtors and ex-spouses, prevention of probate and more. Also, all of his assets as well as any matters taken through probate court are available to the public.
Considering Jackson’s desire to maintain his privacy amidst constant attention and intense scrutiny from the media and public, it is most likely that he and his family would have preferred privacy regarding the details of his estate as well. However, without a living trust, all of those details will be available to any member of the public, providing the media with on-going information of all Jackson’s assets, debts, distributions and more.
The only parts of Jackson’s estate that will not have to pass through the expensive, lengthy and public process of probate are any future funds, which will now filter directly into the Michael Jackson Family Trust – a trust set to be created upon his death. These funds will include revenue from the sale of assets and accumulating royalties. However, because this trust is being created after his death, only additions to his estate that occur post-mortem can filter directly into this trust and be kept private.
Frank Sinatra, another musical legend that has lived on through his music and memory, is an example of a celebrity estate that was managed properly. Frank Sinatra did possess a revocable living trust, and because of that crucial document none of the details of his estate were known by the public. Sinatra was able to maintain his privacy, protect his estate from unnecessary taxes and fees, avoid probate and distribute his estate according to his wishes, all because he created a living trust.
Estate planning for the rest of us: You may not have fame. You may not have fortune. You DO have important loved ones and assets to protect. If you have $50,000 or more in assets than you need an estate plan. Make sure you create a proper estate plan with a living trust. Today is the time to prepare, for tomorrow may be too late. Don’t make that mistake – schedule your FREE consultation with Morris Hall today.