[caption id="attachment_16148" align="alignleft" width="108" caption="Jerome Spector"][/caption]
The stories persist but have quieted down. How much did Michael own? How extensive was his debt? How will his wealth be distributed? How much of his wealth will his children actually receive?
Why is it that when someone of great notoriety dies, the public either scrutinizes every detail or in some cases the silence is deafening? Aside from public interest, the most common explanation lies in estate planning.
If a person dies without a will or without a fully funded living trust, their estate must go through a process known as probate. During the probate process the valuation and distribution of wealth and assets is handled by attorneys and the court. The probate process generally takes one to two years, and the legal costs and court fees are significant.
Any issues discovered during probate become public record. Consequently, anyone is able to access records, write articles, develop news headlines and post information online. Can this situation be avoided? Generally yes, the answer is in estate planning with the use of a revocable living trust.
Estate planning is the process of putting a plan in place to carry out your wishes and provide for loved ones in the event of your death or a disabling circumstance.
What did Michael Jackson do right?
We now know that Michael did leave a will and a revocable living trust. Because of this we may never know answers to many of the above questions regarding his finances. This is because assets held in trust do not have to be probated and therefore are not public record.
If it were not for the arguments among the Jackson family and Michael’s advisers, the public would have never found out anything about his estate. Assuming the children’s mother had not contested the custody of the children, all Michael’s trustee would need to do is deliver the appropriate copies of his trust to the appropriate banks, brokerage firms, record studios, etc. and simply take over and begin the process of managing his estate according to any instructions he had left.
Can it be that simple?
Yes, if one has done his homework and planned ahead.
We do know Michael did a couple things correctly. First, he appointed a guardian and a back-up guardian for the care of his children. Second, he ensured these documents were in the correct hands. We can assume this because all documents surfaced fairly quickly. This should make you question – do your friends, family and advisers know where your important papers are?
A trust is a legal document designed to help you plan for your family, loved ones and charities. A trust is ultimately the outcome of a process that involves developing goals for your financial welfare and that of your family and designing a plan to help you meet those goals. The process includes reviewing your current situation and your plans for your family, retirement, children's (or grandchildren’s) education and charitable giving.
All too often, people are under the impression that they have no need for anything more sophisticated than the will they drew up years ago. Understanding the benefits of a living trust agreement versus a will will help you determine which solution is better suited for your situation. It is important to regularly update your plan to include new assets and changes in family or lifestyle. In addition, if you create a trust, you must be sure that the trust is fully funded.