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Plan Well, Retire Well

Saving and investing your money

Michael Jackson's Death Sheds Light on Planning Well

The past couple of weeks have been filled with discussions on wills and trusts, guardians and executors. Unless you have a legal background or some knowledge of how these things work, some or all of what has been said may have gone right over your head. I will attempt to shed some light on the discussion of Michael Jackson's estate. I just viewed the Will of Michael Joseph Jackson. At first I was taken aback by the simplicity of it. Surely someone as wealthy as Michael Jackson would have a more elaborate will. However, after noticing that the will placed all of his assets into the Michael Jackson Family Trust, I understood why it was simplistic. It was actually a pour over will. A pour over will literally pours over your assets into a living (inter vivos) trust that you would have established during your lifetime, i.e. the Michael Jackson Family Trust.

I've said a mouthful already. Let me begin by telling you what a will is. A will, according to the American Bar Association, provides for the disposition of property owned by you at the time of your death. A will can also answer questions as to your last wishes concerning your minor children. Michael Jackson's will clearly names his mother, Katherine Jackson as the guardian of his minor children and Diana Ross as the successor guardian. A guardian is a person legally responsible for the care of another person and/or her assets. His assets, however, will be placed in trust. A trust is an estate planning arrangement where a trustee (which can be one or more individuals and/or banks) takes title to the assets of the original owner for the benefit of one or more persons known as beneficiaries. Michael Jackson's will named three co-executors of his estate. An executor is in essence a manager of the estate. This person makes sure that all debts and taxes are paid and that proceeds are passed on to the proper beneficiaries. By now, we all know the beneficiaries of Michael Jackson's estate are his three children, his mother, and the charities named in his family trust.

So, is Michael Jackson's will the final word? Not necessarily. Deborah Rowe, the biological mother of the children is still living. Unlike property, children cannot simply be passed along if a living parent still has rights to them. There is speculation that Debbie might contest the will and fight for custody. When someone contests a will, he challenges the validity of it or its terms. The competency of the maker of the will at the time of signing can also be challenged. It will be interesting to watch how this all unfolds in the coming weeks and months.

Although Michael Jackson was a wealthy man, you do not have to be wealthy to establish a will and/or trust. If you have minor children, you can use a will to provide instructions on who will care for your children and their assets in the event of your death. I started my will years ago when my children were small. I did not complete my will because I did not know who I would feel comfortable with caring for my children and their assets. My mother and mother-in-law are both older women with health challenges. Although I knew what I needed to do, I did not do it. Had my husband and I died, the courts would have been forced to make a decision for us because we would have died intestate, without a will. Our children could have ended up with someone that we did not approve of. However, as of the typing of this blog, I have contacted an attorney and am in the process of establishing my will and family trust. Just in case all of this isn't enough to convince you that planning is important, I have include a list below of the benefits of having a will/ trust.

Benefits of a trust (State Bar of Arizona)

  1. Cost savings – avoiding probate provides substantial savings on fees and costs
  2. Incapacity management – named trustees can manage assets for a settlor's benefit if he or she is incapacitated, avoiding the need for a court-appointed conservator
  3. Tax savings – a trust arrangement can reduce estate taxes for a married couple in certain situations. See an attorney for more information
  4. Beneficiary protection – setting up a continuing trust arrangement in either a will or living will can protect beneficiaries who are too young or otherwise unsuitable to receive all of their inheritance outright in a lump sum, and can help protect against loss of assets or use on antisocial purposes such as drug addiction.

For more information on will, trusts, and estate planning, visit the following websites:

American Bar Association

Illinois State Bar Association

State Bar of Arizona

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This was great information on Michael Jackson's Will. Also why we should have one and the benefits of a trust/will.
by Sharon Dell on Wednesday 7/13/2011