For all his eccentric behavior and outrageous spending, Michael Jackson approached estate planning with pinstriped conservatism.
Estate attorneys say his seven-year-old will details a proper — and exceedingly private — estate plan in which all of his assets are directed to the revocable Michael Jackson Family Trust. The beneficiaries are his three children, who will receive 40%; his mother, who will receive 40%; and unnamed charities, which will get 20%. One provision specifically omits ex-wife Deborah Jean Rowe Jackson from the estate.
“What I see is a will that's something similar to what I'd prepare,” said estate attorney Laura Zwicker, a partner in the Los Angeles-based law firm Greenberg Glusker Fields Claman & Machtinger LLP, which works with many celebrities, including Tom Cruise and Warren Beatty. “By putting assets in a trust, nothing becomes subject to public scrutiny or court supervision. It seems he did a good job protecting everything he could from public scrutiny, and that's something we'd recommend for all of our clients.”
Equally impressed is Josh Rubenstein, a New York-based attorney with Chicago-based Katten Muchin Rosenman LLP.
“I thought his will was better than most,” said Mr. Rubenstein, who heads his firm's national trusts and estate practice and who has worked with many celebrities. “Usually, creative artists do no planning or poor planning.”
Mr. Rubenstein said Mr. Jackson's will includes a provision stating that estate taxes on property passing outside the will are to be paid by the taker of such properties. That was a smart clause, according to Mr. Rubenstein, because it means that if Mr. Jackson owned property with others as joint tenants, the property would pass to the other parties without Mr. Jackson's heirs' having to pay estate taxes.
Other property that passes outside of wills includes retirement plans and insurance policies.
“The real problem with Jackson's estate plan was that he kept it all to himself, so that not even the family knew a will existed,” Mr. Rubenstein said. “This is a common problem among celebrities: They're so private and want to control so much that they tell no one.”
For financial advisers as well as estate attorneys, working with celebrities can be trying.
“They're used to having multiple levels of people around them, and not personally engaging in personal decisions. I'm always worried when we're doing the estate plan three times removed,” Ms. Zwicker said.
In Mr. Jackson's case, he was known for firing and rehiring several managers, advisers and attorneys.
One of his financial advisers was Tohme Tohme, whom the Associated Press described as a “financier with a murky past.” Mr. Jackson fired him this year.
Mr. Jackson had an on-again, off-again relationship with one of the executors of his estate, Los Angeles attorney John Branca, who was rehired June 17, just days before his death. Other executors named in the will are music executive John McLain and Mr. Jackson's accountant, Barry Siegel. However, an Aug. 26, 2003, filing notes that Mr. Siegel declined the executor role.
At the time of his death, Mr. Jackson was reported to be as much as $500 million in debt. A court filing estimates the value of his estate at $500 million. Its most valuable assets may be the copyrights to 259 Beatles' songs, for which Mr. Jackson paid $47.5 million in 1985, and the 2,500-acre Neverland estate in Santa Barbara, Calif., which was purchased for $14.6 million in 1988. The singer used some of his assets as collateral to borrow money after his album sales peaked in the 1980s.
“The estate is going to continue to earn money. There will be all of this money coming in and nothing going out. The income stream has been tremendous, but his expenditures were tremendous too. Now, if you take out the spending, you'll be building a nice fund of money to pay off debts and support the family,” said Lewis Stark, a certified public accountant and partner at Eisner LLP in New York who handles royalties for celebrities.
“We've already seen sales of his recordings soar, and it sounds like there may be previously unreleased tracks,” said Beth Kaufman, a partner at Washington-based law firm Caplin & Drysdale.
E-mail Lisa Shidler at email@example.com.