MICHAEL JACKSON’S ESTATE: WHAT WE CAN LEARN

Why is Michael Jackson’s estate still going on?

Michael Jackson’s estate has been going on nearly 15 years!  The most recent reason that the estate is dragging on is that the executors of Jackson’s estate are having a dispute with the IRS over the value of Jackson’s estate and the amount owed in estate taxes.  Executors, John Branca and John McClain, have stated that they are waiting for the final IRS bill before distributing the estate assets into the Michael Jackson Family Trust for the beneficiaries.  According to the terms of Jackson’s trust, the beneficiaries include Jackson’s children (Paris, Prince, and Blanket aka Bigi) and his mother Katherine Jackson.  Katherine is a lifetime beneficiary and when she passes away, her share will go on to Michael’s children.  Meanwhile, family members are confused as to why a portion of the estate assets cannot be transferred into the trust now before the final tax bill is due.  And 94 year-old Katherine Jackson has even questioned if the executors are just waiting for her to pass away.

Is it unusual that Michael Jackson’s estate has gone on for so long?

Anytime there is a high-profile celebrity with an estate worth billions of dollars, things get more complicated.  Many estates are closed within a year or two, but it it not unusual for celebrity estates to be in the probate court longer.  There are image, likeness, and intellectual property issues to be administered which take time. What is unusual, however, is for an estate to be in probate court for over a decade.  In addition to the IRS dispute, there have been a variety of objections that the family has made against the estate executors.  Whenever there is fighting, it can extend the duration of an estate.  In Jackson’s estate, there has been a lot of fighting between the executors and family members.

What is the fighting in Michael Jackson’s estate about?

The fighting started when the estate was first opened. Katherine Jackson was not happy that non-family members were named as executors. The executors are the ones that are in complete control of Michael Jackson’s legacy–his likeness, image, and all intellectual property rights.  Since the initial fighting, there have also been objections over the sale of Jackson’s music catalog to Sony, Jackson’s This Is It documentary, and payment of attorney fees.  Every time a party objects, there are attorney fees on both sides.  Recently Jackson’s son Bigi objected to his grandmother’s attorney fees being paid because he felt that she was fighting a losing battle.  In the end, more fighting and attorney fees, means less money will go on to the beneficiaries.  At the same time, however, when you have a $2 billion estate perhaps that is not an issue.  And certain items regarding the King of Pop’s legacy may be worth the expense to fight.

What can we learn from Michael Jackson’s estate?

Use Your Trust Properly

To begin with, if the Michael Jackson Family Trust was properly funded with Jackson’s assets, then there would not have been an estate opened in the probate court.  This was a critical mistake.  We explore this mistake with Jackson’s estate in our book, Trial & Heirs: Famous Fortune Fights!  When someone creates a trust, it isn’t enough just to sign the trust document.  You need to finish what you started.  The only way that a trust works is by funding your trust which means transferring your assets into your trust.  In Michael Jackson’s cases, if this was done and the trust was used properly, his assets would have avoided the probate court.  With every trust, there is a pourover will done in the event that the assets are not all transferred.  This means that the beneficiary under the will is the trust.  No one ever wants to use a pourover will, though, because it still goes through the probate court process, like in Jackson’s case.

Plan for Estate Taxes

In addition to properly using a trust, there are other takeaways that we can all learn from Michael Jackson’s estate.  One is estate tax planning.  It is shocking that a celebrity with the earning potential of Jackson would not have done significant estate tax planning to reduce the taxes that his beneficiaries will pay.  Because he did choose to leave a portion of his trust to charities, this will help to reduce the estate taxes, but additional measures could have been taken.  This is a basic goal of good estate planning–passing on the most money to beneficiaries and not to the government.

Choose Your Executor and Trustee Wisely

Jackson’s estate highlights something that I always explore with clients–who you choose as your trustee or executor.  The individual should be someone that you trust and an individual that can reduce fighting and drama  We explore this more in our book as well.  Perhaps if Jackson would have chosen his mother or another family member as the executor and trustee, the fighting would have been reduced.  Then the family would control his legacy through his intellectual property rights.  That being said, sometimes clients have concerns about family members having the expertise to manage a significant trust.  In these cases, if family members are named as trustees, they can hire professionals like attorneys and financial advisors to help.  Alternatively, individuals can name co-trustees like a family member with a professional.  The problem with this is that if the individuals cannot work together, it can be disastrous.

Where can families go for more information on wills, trusts, and estate planning?

You can email Danielle at contact@daniellemayoras.com or message her here.

Danielle Mayoras is a legal expert, author and attorney.  She is the co-author of Trial & Heirs:  Famous Fortune Fights!, a legal media expert, and keynote speaker.  You can find her on Instagram, YouTube, and LinkedIn.  For all of the latest legal news and helpful legal tips, advice and information, be sure to check out her blog.

DISCLAIMER: Nothing should be relied on as legal advice. The information contained herein does not create an attorney/client relationship. The information posted is intended for general information purposes only. Laws vary state by state. Anyone seeking legal advice for a specific situation should consult a qualified attorney or similar qualified professional in the appropriate state.

[Photo Credit: Wikimedia Commons]

 

 

     

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    MEET DANIELLE

    Danielle Mayoras is an on-camera legal expert, attorney, author, and keynote speaker. As a respected media source, she has lent her expertise and analysis to hundreds of media sources, including The Associated Press, Los Angeles Times, ABC News, The Wall Street Journal, Vanity Fair, People, Forbes, Kiplinger, The Washington Post, Huffington Post, among many others. She has appeared on Access Hollywood, the Rachael Ray Show, The Insider, CNN, CNN International, NBC Nightly News, Forbes, The Hallmark Channel, ABC’s Live Well Network, CBS, FOX, PBS, and NBC affiliates. Danielle also serves as a legal analyst for CBS News Detroit.

    In addition to co-authoring the best-selling book Trial & Heirs: Famous Fortune Fights!, Danielle has been a contributor to Forbes and other outlets. Danielle has also appeared as a TV host and legal expert on multiple celebrity documentaries for the REELZ Channel. When not doing media, Danielle helps clients in her thriving law firm and serves as a keynote speaker delighting audiences across the country.