June 25 marked another anniversary of Michael Jackson’s death and his extraordinary contribution to the world of music and dance. On June 25th 2009, Michael Jackson died tragically, aged 50 of an overdose of the anaesthetic, propofol. Whatever you feel about him, whether you were one of his legion of fans or just someone who observed him with quiet interest, there is much to learn from his life, death, and legacy. We revisit a few lessons from the arrangement Michael Jackson put in place for the orderly transmission of his assets and how the estate has fared.
Have you written a will?
In spite of his extravagance and extraordinary lifestyle, Michael Jackson sorted out his estate at age 41, some 10 years before his death. He avoided potential misunderstandings with siblings and other family members as his will was properly filed, and specifically cited the names of his beneficiaries, to ensure that his estate would be divided in the way he wanted; for his children, his mother, and to charity. Had he not written a will, it would have been up to the California state laws, to decide what happens to his assets. The “pour over will” also revealed that assets would be transferred to a trust upon his demise.
….or a living trust?
Michael Jackson established a revocable living trust, that allows one, at their death to control transfers to your designated trustee This estate-planning tool lets you transfer all your property, including bank accounts, investments, and real estate, into a separately owned entity whilst you still maintain control as trustee.
Unlike a will, the beauty of a living trust is that the assets it holds at the time of death, do not pass through the probate process. This provides privacy for the deceased family and heirs, and spares them the aggravation of a prolonged and expensive legal process particularly where assets are scattered across various states.
Michael Jackson’s eldest child was only 11 years old when their father died. He and his siblings inherited millions of dollars through a trust, which is an ideal tool where a large inheritance is left for minor children. A trust provides professional management of the assets and keeps them from passing directly to the children until they are old enough to take responsibility for such huge sums of money.
Turning over assets to young adults early can have some harmful outcomes, not only can it place the assets within the reach of the children’s creditors, it can also jeopardise their sense of motivation, the drive to work hard, and embarking on pursuits or careers of their own.
Have you named a Guardian for your minor children?
If you have minor children, one of the most important decisions that you will have to make with regard to your estate plan, is who should take care of your children. .Michael Jackson was a single parent with minor children, it was rather important that he nominated an appropriate guardian for them before his passing. Without this, the state would have made the decision as to who would bring up his children, but his will created the appropriate legal framework to avoid this.
Jackson chose his 79 year-old mother over his siblings as primary guardian for his children. Some suggest that it might have been more appropriate for him to choose a younger guardian. However, his close friend and mentor, Diana Ross, acts as backup, should his mother be unable to continue in the role. Considerations in the selection should include the potential guardian’s family situation, religious and moral beliefs and values, and the financial situation of the guardian.
In 2012 the court amended the custody granted to Katherine Jackson. Paris, now 17 and her siblings, Prince Jackson, 18, and Blanket Jackson, 13, are under the court-ordered guardianship of their cousin T.J. Jackson, 36, and grandmother, Katherine Jackson, 85.
How do you choose an executor?
Choosing who should serve as executor is a critical part of your estate plan. The last thing you need is the possibility of an unscrupulous executor who will mismanage the estate. Ideally you should pick a qualified and experienced professional who will accept legal responsibility and whom you can trust. Trust companies are available in Nigeria and offshore that specialize in trustee services; this is particularly important where a significant estate is involved.
It is best to assume that your loved ones will disagree, and perhaps even contest your will unless you have been very specific and have left little room for ambiguity. Naming multiple executors to provide checks and balances on the decision-making process makes sense, but remember that all executors must agree on all decisions and sign off on all paperwork, which can become cumbersome.
Michael Jackson relied on professionals to ensure that his wishes and intentions would be carried out. He chose a top lawyer and a business executive, as co-executors whom he felt had the necessary expertise and whom he felt would act in the best interest of his beneficiaries. Indeed, estate co-executors John Branca and John McClain have dramatically turned around the estates finances. An empire that was reportedly on the verge of collapse and in debt to the tune of over $500 is now earning significant income and creating more wealth in his death than Michael Jackson built in his lifetime. They have also stood firm inspite of any pressure.
It is reported that Michael Jackson’s estate earned more than $250 million in the first year of his death paying off some $70 million in debt, including the $5 million mortgage on the Jackson family’s Los Angeles home. Interest is serviced with a steady flow of cash.
The film “This Is It,” based on his final concert rehearsal footage, is said to have grossed over $500 million to date. The estate earned $60 million in advance from Sony, with more expected from DVD sales. A posthumous deal to sell unreleased Jackson recordings with Sony Music guarantees $200 million over seven years and brought $125 million to the estate within the first year. It is reported that since Michael Jackson died in 2009, his estate has brought in over $700 million. His executors have been able to pay back his loan from Sony and have secured the future of his music catalogue. The company that the estate co-owns with Sony (Sony/ATV Music Publishing) is currently regarded as the largest music catalogue in the world with an estimated worth of $2billion.
When last did you revisit your estate plan?
Michael Jackson wrote his will in 2001 when he was 41 years old. Within a 10-year period, those named as executors and guardians may no longer be appropriate, either because they have become too old or because your relationship with them has changed. Further, assets may have increased significantly or the level of financial sophistication required for managing them may be beyond the ability of the team in place. Whilst his estate plan may not be perfect, it has certainly gone some way to protect his loved ones.
One watches with rapt attention, the incredible growth of Nigeria’s entertainment industry. An increasing crop of outstanding musicians, actors and actresses, comedians, producers and directors, sports men and women are making their mark in all spheres of global entertainment. A word of caution is important however. Artistes and sportsmen must plan for what could be an uncertain future by being very conscious of their lifestyle with the potential excesses that can be all-consuming, diversifying earning streams, investing and protecting their wealth. Do not be complacent. Whether you are a celebrity or a successful entrepreneur, learn from past examples and protect your future to avoid the well-trodden road from riches to rags…or worse.
It is suggested that only a tiny percentage of Nigerians have written a will, which is the most basic estate-planning tools. It is important to ensure that your loved ones are provided for, should anything happen to you.
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