There are two extremely common mistakes that I see over and over again that wreak havoc on the best-laid estate plans – even the estate plans of the rich and famous. That’s why we can all learn even from a celebrity case like Michael Jackson’s.
The Michael Jackson Estate has featured fireworks since very shortly after Michael died on June 25, 2009. His mother, Katherine Jackson, was not happy about non-family members, including attorney John Branca and music executive John McClain, being named as executors of his estate. So she hired lawyers and challenged the executors in probate court – and the fighting began.
But suddenly there seemed to be an end to the fighting. Katherine Jackson did something very surprising. In November of 2009, she hired a new lawyer, suddenly dropped all of her claims against the executors and reached an out-of-court settlement.
And so it seemed, at least publicly, that Katherine’s battle was at an end. Michael’s father, Joseph Jackson, was not happy about this and wanted to carry on the fight, but since he was not a beneficiary, he did not have the legal right to challenge the executors.
Since then, everything seemed relatively quiet … until recently. About 18 months ago, the executors had sued a charity – the Heal the World Foundation –, which Michael Jackson had started but abandoned while he was alive. A woman named Melissa Johnson had taken over the charity (with Michael’s blessing, she claimed), using many trademarks related to Michael Jackson.
The estate executors sued to stop it. The long, and often contentious case, was scheduled for a trial for late April, 2011. As the charity was preparing for trial, its lawyers filed several sworn witnesses statements, including one by Katherine Jackson.
In it, she sided with the charity, saying that her son never would have approved of the executors suing his Heal the World Foundation. Katherine pointed out that she and other family members are on the board of directors for the charity and they supported it, just like Michael had
It seems that Katherine is, in fact, upset with the executors. Katherine hasn’t been happy with what they’ve provided to her from the estate. It certainly looks like more fighting is coming. But not in this lawsuit. Just a few days ago, the estate executors and attorneys for the charity reached an out-of-court settlement. The charity’s trademarks have to be returned to the estate, and the executors will help manage the charity. But Melissa Johnson and Katherine Jackson will reportedly both remain on the board of directors and the charity will benefit from Michael’s estate.
This was only one of a number of fights surrounding Michael Jackson’s estate. What can we learn from this?
Michael Jackson made several common estate planning mistakes that could have eliminated or at least reduced the fighting. For one, he didn’t make his intentions clear regarding the Heal the World Foundation. Melissa Johnson said he orally made his intentions known about Heal the World, but he never put those wishes in writing.
And, if Katherine Jackson’s sworn witness statement is to be believed, Michael did not name trustworthy executors and trustees. Many people make the mistake of always choosing the oldest child, or the one who lives closest, to administer their final wishes. Instead, everyone should give careful thought to choosing those who would do the best job.
Finally, while Michael Jackson had a revocable living trust, it was rather simplistic and often vague. Strikingly, he never transferred all of his assets into the trust, which would have eliminated the need to have an estate or probate proceedings at all. A properly funded trust that clearly and expressly sets forth a person’s wishes is the best way to reduce the chances of fighting.
Of course, not every estate ends up in a court battle. But it’s much more common than most people realize. And it certainly doesn’t just happen to the families of the rich and famous.
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