While the world is questioning many of the decisions Michael Jackson made during his lifetime, most estate planners are commending him for his Will and Revocable Trust Agreement. For the past several weeks, the press has been (mis)informing the public as to who is “in” and who is “out” of Michael’s Will, and who will be “getting” his kids. The press has been speculating about the size of his estate and who will end up with various assets. So far, the searches have led to dead ends. This is the result of proper estate planning.
In reality, Michael Jackson’s will is an estate-planning device known as a “Pour-Over” Will. A Pour-Over Will is a simplistic version of a “normal” will. Instead of saying who gets what and when they get it, the Pour-Over Will directs the executor of the estate to pay those assets of Michael’s that are passing through probate court to the person in charge of a his revocable trust (the “Trustee”). While there are many reasons for creating a Pour-Over Will and Revocable Trust, privacy, lower legal costs, and making it more difficult to sue are among the more common. The benefits of each are becoming more and more apparent as the Michael Jackson “circus” continues.
The second component of Michael Jackson’s estate plan, the revocable trust, is the mystery. We know very little about it. Undoubtedly, it will surface at some point, but for the present we are left to speculate. A revocable trust is an agreement (contract) between Michael (called the “Grantor,” “Settlor” or “Trustor”) and the Trustee (most likely Michael himself during his lifetime). The agreement tells the Trustee (now the successor Trustee named by Michael to take over at his death or incapacity) what to do with the assets already in the trust and those assets which will be received from the Executor of his estate once the probate court process is completed. This is the document the press really wants to see; it is what most people would consider to be Michael’s “Will.”
In subsequent blogs, I will discuss the provisions of Michael’s Will and what we know of his revocable trust. As the probate court process progresses, I will also comment on the proceedings.
Joseph W. Kenny is a director and shareholder of Hamblett & Kerrigan, P.A. and practices in the areas of estate planning and taxation. He is also a Certified Public Accountant with certification as a Personal Financial Specialist. You can reach Attorney Kenny by email at [email protected].