What is it about celebrities that always draws us in? For whatever reason, we just can’t resist a good, juicy celebrity story. Maybe it’s because we can relate in some way or feel like we can’t relate, which makes celebrities interesting. Their lives always seem attractive, but somehow… just out of reach.
So, for the next few weeks, we will look at the lives of 4 celebrities and see what we can learn from their stories. You’ll be surprised to learn that you have more in common with these folks than you thought (even if you don’t also have your own private jet).
This week, we’re going to turn the spotlight on Michael Jackson. Even if you aren’t old enough to “Remember the Time” when Michael Jackson was dominating the charts, by the end of this article, you’ll see that he left holes in his estate plan that we can learn from.
Before we start, however, I want to address the elephant in the room: many people, maybe you included, find Michael Jackson’s choices… concerning. That is entirely understandable. The intent of this piece is not to defend or promote him in any way. Instead, this article focuses on his family and what they’ve endured in the court system for the last 15 years.
Now, let’s dive in and learn how to avoid the same fate for your loved ones.
Before we look at the specifics of Michael Jackson’s story, let’s dispel a myth about estate planning: That it’s only for the rich or philanthropic. You need not be rich, philanthropic, or famous to need estate planning. You need estate planning if you own anything - even a bank account - and have people in your life you love. It’s as simple as that (dare I say it’s as simple as “ABC” and 1,2,3?). So, as you think about your own estate planning, it’s time to “Beat It” past the misconceptions so your loved ones can empower you to do the right thing.
So 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 right there because there’s already an increased potential for conflict with this setup.
When your assets pass via “Will” (instead of via Trust), your assets must go through a court process called probate, which, my mentor says, is a “lawsuit you file against yourself with your money for the benefit of your creditors.” Subjecting your assets and your family to probate can result in a long, time-consuming, and messy court process that can be unnecessarily expensive to resolve. Plus, the court process is entirely public, meaning anyone can access the records and see information about your assets and family that you would rather keep private.
A trust, on the other hand, bypasses the court process altogether as long as your assets are owned in the name of the Trust when you become incapacitated or when you die. If your assets are appropriately transferred and retitled into the Trust (called “funding” the Trust), your estate can be administered privately, and it often takes less time than the court process. A trust can be set up and funded while you’re alive, thereby avoiding probate, or it can be a part of your Will. When it’s part of your Will, like in MJ’s case, it isn’t established or funded until after the court process has played out. So, if you’re trying to keep your family from going through the court process, putting a trust in your Will completely defeats the purpose.
Here’s what we’ve learned so far: if you intend to keep your loved ones out of court and conflict, creating a Will alone is a “Bad” choice.
Since Michael Jackson’s assets were not owned in a trust, and instead, his assets needed to pass via Will, there have been ongoing legal matters in court, which still haven’t been resolved 15 years (yes, you read that right) after his death. MJ’s family is embroiled in a dispute with the IRS, so the trusts he intended to create for his mother and children remain unfunded. And therefore, some of his assets cannot be transferred to them as he intended. It’s also highly probable that the legal disputes continue to cost the estate a lot of money. That’s money that would have gone to his mother and children otherwise.
To ensure the people you love receive your assets the way you want, I cannot underscore the importance of education and intent. This is precisely why my Life & Legacy Planning process begins with educating you first. The first time we meet, I will show you exactly what will happen to your family and your assets after your death based on your current plan (or the state’s plan for you if you don’t have a plan). From there, I help you decide what suits you and your loved ones based on your desires, assets, family dynamics, and budget.
The Jackson estate’s ongoing battle with the IRS is a stark reminder of the tax implications that can affect your plan and your loved ones. When it comes to taxes, you can’t think in terms of “Black or White” – there are many shades of gray to consider. If you intend to avoid as many taxes as possible, you don’t want to cut corners by doing your estate planning cheaply or on your own. That could be “Dangerous!” I can help you create a comprehensive plan that minimizes taxes as much as possible, potentially saving you and your family (lots of) money.
Regarding saving money, taxes can significantly reduce the value you pass on to your heirs, directly impacting your loved ones. To minimize this impact, together, you and I will explore different strategies, such as gifting assets during your lifetime, establishing irrevocable trusts, or using life insurance policies to cover potential tax liabilities.
So, our next estate planning lesson from Michael Jackson’s story is that the stakes are too high to go at it alone when it comes to saving money on taxes. Work with a professional who can advise you appropriately. We aren’t clear why Michael Jackson didn’t get the kind of support necessary to minimize taxes and protect his estate from a long, drawn-out court process, but we know that we can help you and your loved ones.
The Jackson case also highlights the importance of choosing the right representatives for your estate. These are the people who handle your affairs after you’re gone (they’re called “executors” if there’s a Will or “trustees” if there’s a Trust). MJ’s family members have criticized the representatives for the way they’ve managed the estate. In particular, Katherine Jackson has alleged that the executors have been too frugal and are holding onto assets to maintain control.
There’s always a possibility of conflict between your representatives and your loved ones, even if you aren’t famous and don’t have millions of dollars to fight over. So, to help minimize the potential, we recommend you communicate your intentions to your representatives and your loved ones during your lifetime. Consider holding a meeting so everyone knows your wishes and understands the intent behind your decisions. You may not be able to “Heal the World” on your own, but you can promote healing within your own family and prevent future conflict by opening the lines of communication now. We often facilitate these meetings for our clients.
Also, know that you don’t have to choose family members to be your representatives - even if you feel pressured. If you aren’t sure who the “right people” are, think about people you know who are trustworthy and capable of handling complex financial and legal matters. There’s also the option of choosing a professional representative, as Michael Jackson did, who might be more appropriate for your situation. When you work with us, we’ll be there to “Rock With You” through all the scenarios that could arise so you can choose the right people for your unique circumstances.
Our two final estate planning lessons from Michael Jackson’s story are: 1) Communicate your wishes openly to your representatives and your family, and 2) Choose the right people to act for you when you no longer can.
By learning from the challenges faced by Michael Jackson’s family, you can ward off the possibility of a similar outcome for your loved ones. Your careful planning today can pave the way for a smoother transition of your assets in the future, ensuring that you can support your family after you’re gone rather than creating a mess for them to handle without you. I’m here to serve you and 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.
It’s “Human Nature” to want to avoid thinking about your death, much less plan for it. We get it. But we can live a more fulfilling life when we face our mortality. The Michael Jackson story offers estate planning lessons we can learn from. The good news is that you don’t have to deal with it 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 from a place of education and intention so that your loved ones stay out of court and conflict. And once you’ve created your plan, you can rest easy knowing your wishes will be honored, your loved ones cared for, and your legacy preserved.
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