I learned Few things about Michael Jackson’s Estate Planning.

Jackson’s will provides for the care of his loved ones. A pour-over trust gathers his assets – said to be over $500 million,- making sure that his businesses stay mostly out of the court and mainly out of the public eye. Michael Jackson avoided any misunderstanding by stating each of his children’s names and excluding his former wife and mother of his two older children, Debbie Rowe, from any inheritance. That exclusion was epic, but not  necessary, because the couple were no longer married, but it makes clear that Jackson purposely omitted her, rather than committing an “oversight”.

Another thing I learned from this was to name a guardian. When writing a will, Jackson was “detail oriented,” naming a guardian for his children, who are minors. Without that document, the state would have made the choice of who would raise the kids instead of Jackson. He selected his mother as the first option, and in case that his mother couldn’t survive Jackson, he had a backup, Diana Ross. This was great to stop the other biological parent from claiming custody over the children.

Michael Jackson also gathered an awesome team. As an astute businessman, he named a top-of-the-top lawyer, John Branca, and a clever business executive, John Mc. Clain, as co-executors of his will. He improved the odds that his wishes would be a reality by relying on these two phenomenal experts, Jackson did have good legal advice.

In conclusion, Michael Jackson did have everything figured out.

Good For You MJ!!

Michael Jackson will was very interesting in the fact that he maintained all privacy by pour over his estate into inter vivos trust he created while living. Michael also stated he’s a resident of the state of California due how his estate and his royalty would be taxed. Michael goes on to says he has three children and claim no other children. The children are Prince Michael Jackson Jr., Paris Michael Katherine Jackson and Prince Michael Joseph Jackson II. Michael Jackson explicitly states that he is not married.

Further in his will, he states that he wants to give his entire estate to the “Michael Jackson Family Trust”. They must also go on to follow the trust rules and are apart of the trust not his testamentary trust. He also executes a waiver of bond in his trust stating that he trust his trustee, co-trustee, or any successor trustee shall serve his estate properly. Michael Jackson also set a death tax clause in which he states that the trustee of Michael Jackson family trust will pay his taxes. He appointed three co-executors; which are John Branca, John McClain, and Barry Siegel. He also gives them the option to name different executors incase one of them can’t serve.

He states the waiver of bond clause again, which shows Michael Jackson trust his executors a lot although his will is “simple”.  He gives them the power to invest and reinvest the estate funds and power over all his property, whether it be real property or personal property. He also state that he again has no fiduciary responsibility to his former wife, Deborah Jean Rowe Jackson. This show us that he didn’t want his wife to get any part of his estate and she is not include in his trust that he set up.

Michael states in his will that any property located outside of California would be appointed  to his domiciliary executors. They would become ancillary executors. Michael Jackson gave them “additional powers” such as determine what assets are to be sold, to pay directly or to advance funds from the California estate to the ancillary executors for the pay of all claims, taxes, costs, and administration expenses, and also to distribute the residue among them.

Michael Jackson stated in his will, that if his children are minors at the time of death, he wanted his mother, Katherine Jackson as guardian of the minor children, and in case that his mother doesn’t survives him, fails, or is unwilling to take care of the children, he nominated Diana Ross as guardian.

Lastly, the will states the dates, and that the witnesses, as well as Michael, are competent, and that are over 18 years old to sign the will.

Michael Jackson was no stranger to lawyers while he was alive, reportedly spending $20 million on his successful defense against sex abuse charges. Now, even after his death, he is still keeping lawyers busy, producing a healthy stream of income and paying lots of taxes on that income. Despite the size of the checks the IRS is receiving, however, the agency wants more. Yes, we’re talking estate taxes.

This article takes a look at how estate tax laws are affecting the Jackson estate today. It discusses how the IRS is able to collect both income taxes and estate taxes following a person’s death. The tax and valuation issues are particularly knotty where intellectual property and image rights are at play. More importantly, this article also emphasizes how the subjective nature of valuing assets can lead to messy disputes with the IRS. As we will see, these disputes can be particularly devastating to an estate with illiquid assets that are – or at least appear to be – immensely valuable. 

Income Taxes

Mr. Jackson died unexpectedly on June 25, 2009, at age 50. As frequently occurs with top entertainers, the star’s efforts during his lifetime have continued to produce a steady stream of income even after his death. As always, the IRS wants its cut. First, there are income taxes, which are distinct from estate taxes.

Just as in the case of a living individual, the income collected by an estate is subject to income tax. Mr. Jackson’s estate continues to rake in considerable income. Although Mr. Jackson himself is deceased and is therefore not required to continue filing income tax returns, his estate is still required to file. These are income tax returns, but filed by the estate because it is still collecting income. And that income is considerable.

Estate Taxes

You might think that after collecting all that income tax, the IRS would not ask for more. But the IRS and Jackson’s estate are locked in a Tax Court battle over estate taxes. See Estate of Michael Jackson v. Commissioner (017152-13 U.S. Tax Court). The IRS would like more than his estate reported on its federal estate tax return.

The IRS claims that the Jackson Estate owes a whopping $505.1 million in additional taxes and another $196.9 million in penalties. The penalties are based on the taxes due, so if the tax charge is struck down, the penalties go with it. Currently, the federal estate tax law allows $5.25 million per person to be passed tax-free. But in 2009, the year Jackson died, the exemption amount was only $3,500,000.

Timing the Valuation

Yet it can be hard to compromise polarized figures. Such valuation disputes often boil down to a battle of the experts, each side arguing for an aggressive number. In this case, the estate is sure to argue that the meteoric rise in Mr. Jackson’s fortunes after his death could not have been foreseen.

Rights to receive future payments must be valued for federal estate tax purposes. Their value is the projected future worth (or the aggregate of the future payment stream) discounted to present value. Reminding us of David Bowie bonds – asset-backed securities issued by musician David Bowie that used current and future revenue from recordings made before 1990 as collateral – the IRS asks what a third party would pay today for the right to receive those payments in the future.

Valuing the Estate

The estate tax depends on the value of the estate as of the date of death. Alternatively, the estate can elect to value the assets six months after death, something known as the alternate valuation date. Executors often determine which value is lower and report that lower figure. But apart from the choice of which of these two dates produces the lower tax, the IRS gets a share based on the value of the estate.

That brings us to valuation, the key in most estate tax disputes. Unlike income tax cases, where the amount of cash usually can’t be disputed, estate tax cases usually are about valuing something. Whether it is raw land, a mountain retreat, a conservation easement, or a rare piece of art, valuation disputes can be maddening, especially when dealing with illiquid assets.

For estate tax purposes, only net value – assets minus liabilities – is subject to tax. If the estate includes an asset worth $100 million but there is $50 million of debt, only $50 million is taxed. The presence and details of debts could be key variables for the estate, because Mr. Jackson reportedly had many high-value assets but many large debts too.

http://www.americanbar.org/publications/blt/2013/10/03_wood.html

Many people never stop to think of how hard a job it is to administer the estate or trust of someone who passes away.  Often, it’s a thankless job, filled with headaches.  That’s certainly been the case for the Michael Jackson Estate executors:  entertainment attorney John Branca and music executive John McClain.  Well, at least the headache part.

Here are the top 5 legal challenges and complications that the estate executors have had to worry about in the last few months alone:

1. The AEG Wrongful Death Trial:  It’s aThriller!

Now nearing the five-month mark since opening statements, the heirs of Michael Jackson vs. AEG trial has been filled with twists and turns,
from Lionel Richie’s ex talking to the King of Pop’s ghost to Jackson’s childhood friendship with a mouse (as revealed by the Rolling Stone).

Where is the case now?  Heading to the jury.  While many in the media were quick to report how the Judge recently dismissed two AEG executives from the case, a more telling ruling came down at the same time.  As reported by CNN:

This means that it’s completely up to the jury to decide if the Jackson heirs’ $40 billion claim will win or not.  If the jury views the evidence like the Judge, and feels that there is “substantial evidence” that AEG hired Dr. Conrad Murray and helped cause Michael Jackson’s death, then his children and mother could win a huge payday.

As any trial lawyer can tell you, juries are unpredictable.  Often, plaintiffs have an excellent chance at winning once they get their case to the jury.  The fact they’ve made it this far could mean big trouble for AEG.

2. The IRS Tells The Estate:  Who’sBad?

Much was made of Michael Jackson’s debt when he passed away — it was recently estimated to be as much as $500 million.  While Branca and McClain have taken some heat (like from Randy Jackson, below), there is no disputing that they’ve done a masterful job at guiding the estate through troubled waters into a series of huge paydays.  Reportedly, they’ve brought in over $600 million during the first four years.

3. Alleged Egg Donor Goes To Court To Send Message To Jackson Kids: I Just Can’t Stop Loving You.

The Michael Jackson Estate has other headaches to deal with.  Like who exactly is the mother of Michael Jackson’s three kids?  Deborah Rowe is often referred to as the mother of  Michael Jackson’s oldest two children, Prince and Paris.

But, a new court filing by a woman named Christine Leroux claims that she was the egg donor for all three of Michael’s children, and she enjoyed a secret, lifetime relationship with the King of Pop.  She says she will pursue a custody battle through a guardianship proceeding, because she is worried over the welfare of the kids.

4. Randy Jackson Still Mad At The Executors; Wants Them ToBeat It.

As crazy as Leroux’s allegations sound, they don’t stand alone.  In fact, far from it.  John Branca told 60 minutes that they’ve had to deal with countless ridiculous claims.

Michael Jackson’s executors also have to deal with continued rumblings from Jackson’s siblings, some of whom maintain that the will was fake.  Recently, brother Randy Jackson called Branca and McClain — along with their lead attorney, Howard Weitzman — the “three stooges.”  He says the family is not happy with them, and points to the recent IRS dispute as the “tip of the iceberg”.

After the failed “kidnapping” attempt of Katherine Jackson last year by Randy and two of his siblings (Janet and Jermaine), Randy admits that the siblings are not all getting along.  But the only family member who, at this point, has legal standing to challenge the executors is Katherine Jackson.  Despite some initial complaining in the months after Michael Jackson’s death, Katherine has not fought Branca and McClain during the last few years.

5. The Latest Sex Abuse Claim:  Was Jackson ASmooth Criminal?

And where would Michael Jackson’s legal turmoil be without at least one claim of child molestation?  Choreographer Wade Robson was one of the King of Pop’s staunchest allies during the 2005 criminal trial against Michael Jackson — which found him not guilty of child molestation.

A few months ago, Robson filed a claim against the Estate contending that he was the victim of abuse by Jackson as a child.  He points to a breakdown and years of therapy allowing him to reverse course and bring the claim, after repeatedly testifying and saying in interviews that Jackson never touched him.

While perhaps no other estate executors and trustees have ever had more complicated legal messes to sort through, the Michael Jackson Estate still has an estate planning lesson for the rest of us.  Everyone planning their estate should think carefully about who should serve in that all-important role of executor or trustee.

Many make the mistake of automatically selecting the oldest child, or the one who lives closest, rather than the person — even if not a family member — who is the most trustworthy and well-qualified to do the job.  Administering an estate or trust is never easy — even when there aren’t Jackson-sized legal dilemmas at every turn.  So choose carefully when planning your estate and trust!

http://www.forbes.com/sites/trialandheirs/2013/09/17/top-5-legal-challenges-facing-michael-jacksons-estate-executors/2/

Michael Jackson’s estate has ordered Conrad Murray to stop talking about his former client, insisting that the doctor’s revealing remarks violated physician-patient privilege.

Calling Murray’s comments “shameful” and “cowardly”, attorney Howard Weitzman asserted that Murray has broken California law by giving interviews about the late singer. “Your interviews about Mr Jackson’s personal life, health, and … the medical treatment you supposedly provided him … disclose precisely the type of information that the physician-patient privilege is designed to protect,” Weitzman wrote in a letter obtained by RadarOnline.com. “It is beyond ironic and cowardly that after electing not to testify before the jury that convicted you, you are now trying to publicly defend your conduct by sharing supposed conversations you had with Michael Jackson and alleged details [of his] … condition.”

Murray has given a handful of interviews since leaving prison last month. The 60-year-old served half of a four-year sentence for involuntary manslaughter; he was convicted for administering the drugs that led to Jackson’s death. Speaking to the Mail on Sunday, Murray repeated his claim that it was “Michael Jackson [who] accidentally killed Michael Jackson.”

“I believe [Michael] woke up, got hold of his own stash of propofol and injected himself,” he said. “He did it too quickly and went into cardiac arrest.”

“I was [Michael’s] closest friend,” Murray said in another interview, with Australia’s Channel 9. “I was [his] doctor, but I spent more time with him as a friend than taking care of him medically.” But the disbarred physician has also revealed graphic details of Jackson’s condition at the end of his life: “He wore dark trousers all the time because after he went to the toilet he would drip for hours,” Murray said. “I held his penis every night. I had to put a condom catheter on him because … [he] was incontinent.”

In reply, Murray’s criminal lawyer said that “the door to Michael Jackson’s medical history” had been “opened widely” by his family’s failed lawsuit against AEG Live. That case hinged on minute details of Murray’s behavior and Jackson’s symptoms. “I find it absurd that the estate is making such strenuous objections,” attorney Valerie Was told the New York Daily News. “It’s fairly obvious that this letter was written with the intent to release it to the public and intimidate Dr Murray.”

http://www.theguardian.com/music/2013/nov/29/michael-jackson-doctor-cease-desist

“Remember the Time”