Exploring Celebrity Estate Plans: Part 1 of 4 - Michael Jackson
What is it about celebrities that always draws us in? Whether we relate to them or find their lives utterly different from our own, we can't resist a juicy celebrity story. Their seemingly glamorous lives remain just out of reach, piquing our curiosity.
For the next few weeks, we'll dive into the lives of four celebrities and uncover valuable lessons from their stories. You might be surprised to discover how much you have in common with these stars (even without a private jet).
This week, we're focusing on Michael Jackson. Even if you're not old enough to "Remember the Time" when he ruled the charts, you'll soon see the significant gaps in his estate plan that we can all learn from.
First, let's address the elephant in the room: many find Michael Jackson's personal life and choices concerning, and that's entirely understandable. This article isn't about defending or promoting him, but about examining what his family has faced in the court system over the past 15 years.
So, let's dive in and learn how to prevent similar challenges for your loved ones.
Simple as "ABC" (and 1, 2, 3)
Before we delve into the specifics of Michael Jackson’s estate plan, let's bust a myth: estate planning isn’t just for the wealthy or the philanthropic. You don’t need to be rich or famous to need an estate plan. If you own anything—even just a bank account—and have people you care about, you need estate planning. It’s as straightforward as that (dare I say it’s as simple as "ABC" and 1, 2, 3?). So, as you think about your own estate planning, let's "Beat It" past the misconceptions and ensure you're making the right choices for your loved ones.
Now, what happened in Michael Jackson’s case? He had an estate plan that included a Will, which established trusts for his mother, Katherine, and his three children, Paris, Prince, and Bigi.
Let’s stop here, as this setup already hints at potential conflicts.
When assets pass via a Will (instead of a Trust), they must go through a court process called probate. As my mentor says, probate is like “a lawsuit you file against yourself with your money for the benefit of your creditors.” Subjecting your assets and family to probate can lead to a lengthy, costly, and public court process. This means anyone can access the records and see details about your assets and family that you would rather keep private.
A trust, however, bypasses the court process entirely, provided your assets are owned by the trust when you become incapacitated or pass away. If your assets are properly transferred and retitled into the trust (this is called “funding” the trust), your estate can be managed privately and often more quickly than through probate. A trust can be set up and funded while you’re alive, thus avoiding probate, or it can be a part of your Will. In Michael Jackson’s case, his trust wasn’t established or funded until after the probate process was completed, which defeats the purpose of avoiding court involvement.
Here’s what we’ve learned so far: if your goal is to keep your loved ones out of court and conflict, relying solely on a Will is a “Bad” choice.
Ensuring Peace of Mind for the “Man in the Mirror”
Because Michael Jackson’s assets were not placed in a trust and instead had to pass through a Will, his estate has been entangled in legal issues for 15 years after his death. Currently, MJ’s family is locked in a dispute with the IRS, which means the trusts he intended for his mother and children remain unfunded. Consequently, some of his assets cannot be transferred to them as he likely intended. These ongoing legal battles are also draining the estate of money that would have otherwise gone to his family.
To ensure that your loved ones receive your assets as you wish, the importance of education and intent cannot be overstated. This is precisely why my Life & Legacy Planning process begins with educating you. During our first meeting, I will show you exactly what will happen to your family and assets based on your current plan (or the state’s plan for you if you don’t have one). From there, I help you make intentional decisions tailored to your desires, assets, family dynamics, and budget.
Taxes: A Potentially Tricky Situation!
The Jackson estate's ongoing clash with the IRS serves as a vivid reminder of the tax complications that can impact your estate plan and your loved ones. Taxes are rarely a matter of "Black or White" – they involve many nuanced shades of gray. If you want to minimize taxes effectively, cutting corners by doing your estate planning cheaply or on your own can be “Dangerous!” I can assist you in creating a comprehensive plan that minimizes taxes as much as possible, potentially saving you and your family a significant amount of money.
Taxes can greatly diminish the value of what you leave to your heirs, directly affecting their financial well-being. To mitigate this impact, we will explore strategies such as gifting assets during your lifetime, establishing irrevocable trusts, or using life insurance policies to cover potential tax liabilities.
The takeaway from Michael Jackson’s story is clear: when it comes to saving on taxes, the stakes are too high to navigate alone. Collaborate with a professional who can provide proper guidance. While we don’t know why Michael Jackson didn’t receive the necessary support to minimize taxes and protect his estate from a prolonged court process, we are certain that we can help you and your loved ones avoid similar challenges.
Dodging the "Thriller" of Legal Disputes
The Jackson case underscores the critical importance of choosing the right representatives for your estate. These are the individuals who will manage your affairs after you’re gone (referred to as “executors” for Wills or “trustees” for Trusts). Michael Jackson’s family has been vocal about their dissatisfaction with the estate representatives, particularly Katherine Jackson, who has accused the executors of being overly frugal and hoarding assets to maintain control.
Even if you’re not a celebrity with millions at stake, conflicts can arise between your representatives and loved ones. To minimize this potential, it’s crucial to clearly communicate your intentions to your representatives and loved ones during your lifetime. Consider holding a family meeting to ensure everyone understands your wishes and the reasons behind your decisions. While you may not be able to “Heal the World,” you can foster harmony within your family and prevent future conflicts by initiating open communication now. We often facilitate these meetings for our clients.
Additionally, you don’t have to choose family members as your representatives, even if you feel societal pressure to do so. If you’re uncertain about who the “right people” are, think about individuals who are not only trustworthy but also capable of handling complex financial and legal matters. You also have the option of selecting a professional representative, as Michael Jackson did, which might be more suitable for your situation. When you work with us, we’ll be there to “Rock With You” through all the different scenarios, helping you choose the right people for your unique circumstances.
The two key lessons from Michael Jackson’s story are: 1) Communicate your wishes openly with your representatives and family, and 2) Choose the right people to act on your behalf when you no longer can.
By learning from the challenges faced by Michael Jackson’s family, you can prevent similar issues for your loved ones. Your careful planning today can ensure a smoother transition of your assets in the future, supporting your family after you’re gone and avoiding a chaotic situation. I’m here to help you ensure your estate doesn't become a "Thriller" of legal battles, but instead a harmonious transition that would make even the King of Pop proud.
“Together, We Stand" - Here to Support You
It's natural to shy away from thinking about death, let alone planning for it. We understand. However, confronting our mortality allows us to live more fulfilling lives. The good news is, you don’t have to face this alone. We're here to support you every step of the way.
As a Personal Family Lawyer Firm, we help you create a Life & Legacy Plan grounded in education and intention, ensuring your loved ones stay out of court and avoid conflicts. Once your plan is in place, you can rest assured knowing your wishes will be honored, your loved ones will be cared for, and your legacy will be preserved.
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This article is a service of 20WestLegal LLC. We don't just draft documents; we ensure you make informed and empowered decisions about life and death for yourself and the people you love. That's why we offer a Planning Session, during which you will get more financially organized than you've ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule an Initial Planning Session and mention this article to find out how to get this $750 session at no charge.
The content is sourced from Personal Family Lawyer® for use by Personal Family Lawyer® firms, a source believed to be providing accurate information. This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking legal advice specific to your needs, such advice services must be obtained on your own separate from this educational material.