After the sad and tragic deaths of Michael Jackson and Farrah Fawcett, we are all reminded of how fragile our lives are and how quickly things can change. The deaths of these two iconic figures should serve as a wake-up call for many to put their legacy plans in order. It should be noted that the reality is that most people die without a will in our country. Some of the most intelligent and famous people, Abraham Lincoln, Howard Hughes, and Pablo Picasso, died without taking the time to write a will.
Many of us procrastinate, minimizing our personal need or legal interest to draft durable wills, trusts, wills, and power of attorney. The complexity of combining and coordinating diverse assets such as individual assets, jointly owned assets, retirement plans, life insurance, annuities, and business interests may seem too daunting to some. For others, they don’t realize the importance of looking at all of their assets from an overall perspective; that is, when all is said and done who ends with what. Is the distribution of assets fair and equitable for all parties after payment of taxes, debts and property administration costs?
For many, Michael Jackson’s untimely death has given rise to these and many other estate planning problems. At this point, no one knows if he has a will and/or trust for his children, or if his inheritance plans are up to date. But by looking at the situation (and a bit of speculation), some important estate planning considerations for all of us can be explored:
Trusteeship: It is not clear what provisions Mr. Jackson in his will (assuming there is a valid will) for his children. Initial word from the media was that this would be a chaotic battle in court over the custody issue of her children, even if her will shows her preference for guardianship. Even if challenged, the appointment of a guardian in a will will remain a very important factor in any court action and conveying your wishes is always the wise thing to do in any case. The object of the lesson is clear: Parents with young children should clearly see the need for a will indicating the choice of guardian for their children.
Trusteeship: No one knows if Mr. Jackson has set up a trust for his children. While it appears that his estate is now bankrupt, this situation may change with the post-mortem sale of his music someday providing assets and wealth to his children (think post-mortem income from Elvis Presley’s estate). Hopefully, he sets up a trust that will protect and manage his assets. To increase their chances of becoming a competent adult, they may structure their beliefs in a way that develops their sense of initiative and personal responsibility while still meeting their basic needs. Experienced estate planning attorneys explore this type of forward-looking planning when dealing with children and their anticipated needs if a parent dies prematurely.
Special Inheritance: The media speculated that the enormous assets of his estate (his Beatles song rights) went to Paul McCartney. This generosity may be commendable, but from a heritage estate planning perspective this can be problematic. First, if the inheritance turns out to be bankrupt, the inheritance will not be available for the property to be sold and the proceeds will be used to pay off the debts of the inheritance and/or benefit their children. Second, generally, this kind of inheritance is often given in a manner that is not subject to land tax. This can distort how assets are divided among beneficiaries. The point here is that this inheritance may have made sense when the will was originally drafted when Mr. Jackson was wealthy, but this inheritance could be very problematic in the current situation. The lesson here is that inheritance plans need to be reviewed periodically as family needs and financial situations change over time.
Special Needs Guardianship: Farrah Fawcett dies leaving a son imprisoned for addiction issues. Issues for people with children with special needs are often underestimated, ignored or not fully considered. As his only child, did he leave all his wealth to his son? Will he give that he must get his inheritance at the time of his death or will he give the trust to his advantage? If he established a mandate, what terms and conditions did he make in favor of him? These difficult questions arise not only for children with addiction problems, but for children with cognitive impairments, physical disabilities, and emotional problems. In addition, special needs guardianship may be required where children receive public assistance from state and local governments.
Bottom line: Protect your family and protect your hard earned wealth. Take the time to plan your affairs with an experienced estate planning attorney. Remember, if you die without a will and trust, your state’s will will control who gets your assets and how they get your assets. When minor children are involved, courts generally place the inheritance of the children in trust according to what the judge deems appropriate. In addition, judges will determine who will be the guardian of any trust they place in your children and they will determine who should be the guardian of your children. These and other important considerations must be determined by you and not by the courts, so go ahead and do it now so you don’t leave the problems Michael Jackson and Farrah Fawcett may have left.
© Steven J. Fromm, 2009
