June 25 marked the first year anniversary of
Michael Jackson’s death. 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
so far.
Write 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.
Consider 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 his 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.
Name a Guardian
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.
Choose your executors carefully
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 specialise 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.
It is reported that Michael Jackson’s estate has
earned more than $250 million in the past year, 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 $252 million worldwide. 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 has already
brought $125 million to the estate.
Revisit your estate plan periodically
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. It is suggested that
only a tiny percentage of Nigerians have written a will, which is the
most basic estate-planning tool. It is important to ensure that your
loved ones are provided for, should anything happen to you.
Drop us an email at personalfinance@234next.com
with your questions, experiences, successes and challenges. All letters
will be considered for publication, and if selected, may be edited. We
would love to hear from you.
