Michael Jackson’s will provides lessons for everyday people
With the sudden and mysterious death of Michael Jackson on June 25, one question left unanswered at least temporarily was what would happen to his three children and how would his wealth be divided.
With this as background, the inevitable question was did Jackson have a will and, if so, what did it say.
Initial reports that he died without a valid will, a serious problem for an estate of his size, proved wrong.
On Wednesday, July 1, less than a week following his death, Jackson’s executors filed his will, which was prepared in 2002.
For an elder law attorney, the Michael Jackson case raises fascinating issues. It is likely that his estate, like those of many celebrities, will take years to settle. But lessons for average people can be learned in the meanwhile.
Based on the evidence so far, the 50-year-old performer, although tremendously extravagant with his wealth, was also astute enough to think through his goals for his estate and consider how they could be accomplished.
On the other hand, it would seem that there was little or no tax planning and the Federal Estate Tax exposure alone on his estate will likely be enormous.
Here is some background on the will and then commentary.
The Michael Jackson will. The will that has been published on several Internet sites (check Google for references) is what is known as a “pourover will” and is extremely simple.
A pourover will pours over any assets remaining in the individual’s name at the time of his death into a trust. Since the trust does not have to be made public, we have only a general outline of its terms, but this is enough to get a general sense of the intent.
The will begins, as many wills do, “I, MICHAEL JOSEPH JACKSON, a resident of the State of California, declare this to be my last Will, and do hereby revoke all former wills and codicils made by me.”
Later, he declares that his marriage to Deborah Jean Rowe Jackson has been dissolved, and he has three children living, Prince Michael Jackson Jr., Paris Michael Katherine Jackson, and Prince Michael Joseph Jackson II.
In Paragraph III, Jackson states, “I give my entire estate to the Trustee or Trustees then acting under that certain Amended and Restated Declaration of Trust executed on March 22, 2002 by me as Trustee and Trustor which is called the MICHAEL JACKSON FAMILY TRUST …”
Jackson states in Paragraph VI that he has intentionally omitted to provide for his former wife.
In Paragraph VIII, Jackson provides that, if any of his children are minors at the time of his death, he nominates his mother, Katherine Jackson, as guardian of the persons and estates for them. If Katherine Jackson cannot or will not serve, he nominates Diana Ross as guardian of the person and of the estates. Michael Jackson’s children range in age from 7 to 12.
Based on statements to the press, the distribution of the estate under the trust appears to be 40 percent to Katherine Jackson, 40 percent to Michael Jackson’s children, and 20 percent to various children’s charities.
Commentary. Here are some observations in no particular order:
The advisability of a living trust is very state-specific. Jackson’s decision as a resident of California to establish a living trust was smart since California has very expensive procedures and fees in connection with probate.
I often talk to clients who reference writers such as Suze Orman who claim that everyone should have a living trust. Pennsylvania does not have the expensive procedures and fees in connection with probating a will, and a living trust is less useful here.
Naming a desired guardian for minor children is critically important. Many younger people think that wills are for the elderly, ignoring the possibility of a custody dispute, especially if both parents die.
Naming who he wished to raise his children was his most important decision, especially since his mother is 79 years old and his former wife would likely seek custody with all the property consequences involved. His former wife has surfaced and observers can stay tuned.
As a single person, Jackson was limited in tax planning. The opportunities, especially for federal estate tax planning for single people, are not nearly as expansive as for married couples. Still, by using planned giving or more charitable options, Jackson could have saved some federal estate taxes. It is possible that more tax planning is contained in his trust.
About the Author Janet Colliton
Esquire, Colliton Law Associates, P.C. Janet Colliton has practiced law for over 38 years, 37 of them in Chester County, Pennsylvania, a suburb of Philadelphia. Her practice, Colliton Law Associates, PC, is limited to elder law, Medicaid, including advice, applications and appeals, and other benefits planning including Veterans benefits, life care and special needs planning, guardianships, retirement, and estate planning and administration.