When relentless news coverage ensued following the death of Michael Jackson, it likely came as no surprise to his family, given his icon status and the unexpected timing and nature of his death. However, the media attention that surrounded the administration of his estate, making it a very public and dramatic affair, was neither expected nor welcomed by his loved ones.
Despite the well-known calamity that has arisen out of this estate administration process, Jackson did take one proper measure to organize his estate– he established a trust. When utilized in the right way, a trust ensures that matters are kept private and out of the probate court. However, Jackson failed to transfer his assets into that trust. Thus, what Jackson created was essentially a “pour-over” will that was intended to place his assets into a trust following his death. Unfortunately, a will is not an ideal vehicle for passing on assets, particularly significant assets amounting to $600 million dollars.
As a result, Jackson’s estate was forced to go through probate, where his estate and family endured an exhausting court process and torrent of public scrutiny. Ultimately, his estate was deprived of the crucial benefits of establishing the trust– privacy, decreased risk of family feuding, no waiting periods, asset protection, and avoidance of the probate court and estate taxes. In the end, Jackson’s ineffective estate planning cost an estimated $200 million in estate taxes, subjected family members to years of emotionally-draining litigation, and failed to accomplish estate planning objectives such as the disbursement of a trust fund for his children.
This high profile case serves as a startling reminder of the grueling consequences and costs that can result from poor estate planning. The financial burdens and emotional toll could have been prevented simply through the proper construction of an estate plan. A Revocable Living Trust, when utilized correctly, ensures privacy and efficiency in handling one’s affairs, as well as minimal hardships on loved ones.