Michael Jackson: Created A Trust But His Estate Still Had To Go Through Probate

As a single father, Michael Jackson created a revocable trust to ensure that his three children, Prince, Paris, and Blanket, as well as his mother, Katherine, whom he named the guardian of his then-minor children, would be taken care of should he pass away.

At first glance, one would think he planned it right – including stipulations for when his children would receive their inheritance, planning for the care and well-being of his mother throughout her lifetime, and ensuring that his assets would go to his children upon her death. However, he neglected one very important step:? He did not fund the Trust.

His estate was estimated to be $500 million in debt when he died but has since recovered, achieving what has been coined a “$1 Billion turnaround” posthumously. Because his assets were not put into the Trust, his estate had to go through Probate before the Trust could be funded. This opened it up to litigation leaving his estate vulnerable to contests from his siblings, claims from creditors, and other legal and financial predicaments – including a case against the IRS over the valuation of Michael’s estate ($111 Million) and his image and likeness ($4 Million) at the time of his death, which wasn’t settled until 12 years after he had passed. As for his intended beneficiaries, they had to live off an “allowance” from his otherwise frozen estate.

The planning process does not end when the Trust document is signed. The next step to this process is “funding”, which is the process of transferring your assets into the Trust you have created. This may include Bank Accounts, Investment and Mutual Fund Accounts, Stock and Bond Certificates, Business Interests, and Real Estate. ?It is critical that your assets be titled in the name of your Trust in order for your Trust to meet your planning goals and avoid probating your assets.

To comply with the U.S. Treasury regulations, we must inform you that (i) any U.S. federal tax advice contained in this newsletter was not intended or written to be used, and cannot be used, by any person for the purpose of avoiding U.S. federal tax penalties that may be imposed on such person and (ii) each taxpayer should seek advice from their tax advisor based on the taxpayer’s particular circumstances.

Nothing in this message is intended to provide legal advice.? This message is for educational purposes only.