It’s been one year since the world was rocked by news that theKing of Pop, Michael Jackson, had passed away. In that time, much of the reporting about his finances focused on what the pop icon did wrong. For instance, only $70 million of his reported $500 million indebtedness has been paid off, AP reports. However, there are many financial moves Michael Jackson got right. The documentary, Michael Jackson’s This is It based on his final concert rehearsal footage, has sold more than 5 million DVDs worldwide and Sony Music, Jackson’s record company grossed $252 million. In fact, his estate has earned more than $250 million alone in the year since he died thanks to attorney John Branca and music executive John McClain, who are building several new streams of income, including sales of a video game and through many licensing agreements. Although Jackson’s executors manage millions of dollars, his estate planning requirements aren’t too different from what the average Joe or Jane should be doing. You may not have Jackson’s millions, but estate planning attorney Wynne Whitman, a partner with Schenck, Price, Smith & King L.L.P., and the author of Smart Women Protect their Assets (FT Press; $13.99), recommends four things you can do that Jackson did to ensure that his children and his legacy would be financially secure. (Source: MichaelJackson.com/us).
Draft a legal will. Seventy percent of people do not have a will, says Whitman. “The fact that [Jackson] had a will and had a trust for the family, named a guardian for the three adorable children and really was proactive in making that plan whether his death was the next day, in ten years or when he was 90,” ensured that his earning potential would not be lost and his family was protected from those who might try to take advantage of them.
Set up a trust. Jackson’s Trust included all of his assets including The Mijac Music catalog of copyrights on songs that Jackson wrote, which generated $25 million in the past year thanks to heavy airplay on radio stations and song and album sales. Trusts are perfect for celebrities who want to keep their finances private, says Whitman, but they can be useful for ordinary people who want to avoid probate, the court appointed sale of assets to satisfy debtors; or those who want to provide for minors who are too young by law to manage their own money or property. Unfortunately, Jackson’s trustended up on the Internet, but yours most likely won’t. In addition, a person can set money aside in a trust to pay for taxes, medical bills, and funeral expenses (Source: Wikipedia).
Hire an estate planning lawyer. Jackson hired John Branca (pictured here at his wedding with Jackson in 1987), who specialized in entertainment and estate planning. Not all lawyers are familiar with how to set up the different types of wills and trusts. Even though Anna Nicole Smith, the infamous model/actor who died in 2007, had a will, Whitman guesses that it was not created by an estate planning attorney because Smith’s will was not a well drafted document and did not include a trust to keep her finances out of the news (Source: ABC News).
Chose the right people to act on behalf of your estate. When it came to his children, Jacksonknew his mother, Katherine Jackson, was the right person to care for their physical and emotional well being, but he certainly didn’t trust her to run his finances. It’s not because she is untrustworthy. She’s just not an expert. Remember, the person you choose to be a guardian and the person who manages your money doesn’t have to be the same person. Branca and McClain were experienced music industry professionals who had the ability to help his music catalogs earn the most money for his children and his charities (Source: Shahdai Richardson). Further Reading: See “Planning for the End” for more information about estate planning.