With so much exposure and scrutiny on everything that's happened to Michael Jackson's estate since he died, it should probably come as no surprise that his living trust has been leaked to the media and made public. Wills are public documents and available for everyone to read (once they are filed with the probate court after someone dies). Accordingly, the Michael Jackson will has been floating around for months.
Trusts, however, are another matter. Living trusts are intended to be private documents, operating outside of the court process (unless there is a dispute or challenge).
Someone decided to sneak a copy of Michael Jackson's living trust document to the press, and a British website has the complete document online for your reading pleasure. Click here to read the Michael Jackson Family Trust.
Note that the website mistakenly refers to this document as his "Will" -- it's actually his trust, not his will.
So what does the King of Pop's trust reveal?
First, consistent with prior media reports, charity gets the first 20%, with the rest split equally into two separate pots to be held for the benefit of his children and his mother, Katherine. When Katherine passes, her share goes onto the children.
Interestingly, the portion that goes to charity is from his "gross" estate, meaning the charities get their share before paying taxes and other expenses (which are high, given the estate executors high fees and commissions). This means that Michael Jackson's children and mother actually get less than 40%, each, because the estate taxes and other expenses of the estate and trust are paid from their shares only, not the charities' shares.
Katherine Jackson and Michael's two estate executors, John Branca and John McClain, get to decide what charities get the money. They have to choose charities that benefit children or children's causes. It's interesting that Michael included Katherine in this, but excluded her from acting as trustee or executor to manage any of his assets.
As with many standard trusts, Michael Jackson's children do not get their shares now. Rather, the trustees will administer the money for their benefit, giving them quarterly payments (and more as needed for their living expenses, education, buying a home, starting a business, or other reasons) with the rest passing to them in stages. They get all of the income earned from their share of the trust assets throughout their lives, but the bulk of the money gets turned over to them at ages 30 (one-third), 35 (one-half of the rest), and finally, age 40 for the remainder.
And what of the trustees' compensation? The Probate Lawyer Blog previously discussed how the high commissions paid to the estate executors might have been different if the trust assets had been funded into the trust during Michael Jackson's lifetime (which means that there would not have been a "probate" estate and the will would not have been used, so everything could have been handled outside of court).
If that had been the case, perhaps the estate executors (which include Michael Jackson's former attorney, John Branca, who drafted the will and trust), would not have been able to earn 10% on certain business deals as they now receive. Why? Because trusts often specify the level of trustee compensation and could have limited this percentage.
It turns out that Michael Jackson's Trust does not limit how much his trustees are to be paid. Rather, the trust allows them to receive "reasonable compensation", without needing a court order. While this is fairly typical language for many trusts, it does again raise the question of whether a 10% commission for the executors is "reasonable."
Overall, there are no big surprises with Michael Jackson's trust, other than the fact that it is pretty basic. Of course, nothing else about his estate planning has been sophisticated, so why would his trust document be?
That's why people should work with experienced estate planning attorneys, not general attorneys who specialize in other areas of the law and offer to help with a will or trust. Not all wills, trusts, or other estate planning documents are created equal.
If you or your loved ones haven't put your affairs in order, take the time to ask around and search out a lawyer who truly specializes in wills and trusts. Don't leave your legacy up to chance by working with an attorney who doesn't have the expertise to fully protect your loved ones after you are gone.
Posted by: Andrew W. Mayoras and Danielle B. Mayoras, co-authors of Trial and Heirs: Famous Fortune Fights! and co-founders of The Center for Probate Litigation and The Center for Elder Law in metro-Detroit, Michigan, which concentrate in probate litigation, estate planning, and elder law. Andrew and Danielle are husband and wife attorneys, professional speakers and consultants across the country.Follow us on Google+