The King is dead; long live the King.1 The King of Pop's mortal life has ended with debts in excess of $500 million but the value of his immortalized image could mean an immensely valuable future estate.
What can the estate-planning profession learn from the Michael Jackson estate? What kind of testamentary document was used? Was the trust well designed? How will intellectual properties be managed? What executor will preside over the Michael Jackson estate?
And there are more questions: Would the executor like to be assisted by one of the esteemed readers of this newsletter, or perhaps its editor? Let's take a closer look at the issues of the Michael Jackson estate.
King of Rock
What better way to begin a review of an entertainment mega-estate than with a look at the Elvis Presley estate. Elvis, known as the King of Rock, died in 1977. Did rock fans continue to pay homage to their musical King after his death?
Time and musical tastes change and the demographics of the buying public move on. Nothing lasts forever. Before rock there was swing and big band dancing. After rock came a host of musical genres including but not limited to metallic, reggae, fusion, punk, disco,2 alternative, progressive, rap, new wave, hip hop, and "ska" (don't ask).
But the staying power of the Elvis estate is testament to a long residual loyalty. Some might even opine that rock and roll is here to stay, and that it will never die. Similarly, "pop" is a huge, inclusive genre that could last indefinitely. An iconic figure such as Michael Jackson could potentially generate revenues for as long as intellectual property rights can apply. The duration of musical copyrights on works created after January 1, 1978 is 70 years from the death of the author.3
The Elvis Estate
Elvis Presley remains a top-earning celebrity long after his death. The merchandising of his image, the sale of his music, the use of his home, Graceland, as a tourist destination have all created a model for the successful continuation of a musical business after a super star's death. An infusion of cash to revitalize the estate was secured by selling a large stake in the estate for $100 million in 2003.
It has been more than 30 years since his death, but Elvis remains a top-earning celebrity. He leads the annual Forbes list of top-earning dead celebrities each year. In 2008, Elvis earned $52 million, far more than most living celebrities.
But the Elvis model also illustrates potential pitfalls such as having had his estate become part of a legal tug-of-war for six years following his death. And Elvis died strapped for cash, a condition that Michael Jackson's estate also shares.
In light of this model, every aspect of Michael Jackson's estate is amplified in importance. Was his will valid? What kind of estate planning did he do? Who are his executors? Will there be paternity claims involving his children? What will become of his assets, his music, and his legacy? In many ways, his death is not the end of his empire--it is just the beginning of a major estate.
Michael Jackson's Will
If you are working in the probate court and a will for Michael Jackson arrives, will you remember that moment forever? Will security guards stay with this document and lock it down so that some clerk doesn't walk it outside and sell it on E-Bay someday?
But aside from being the will of someone very famous, the will of Michael Jackson is relatively simple (assuming the version posted on line is actually the will that is ultimately submitted for probate).4
The apparent will has some traditional planning features but is surprisingly lacking in execution formalities.
The traditional features include using the will as a simple public document while the more elaborate instructions and estate arrangements are kept private in a trust. In other words, a pour over trust.
The will is a modest five pages that was submitted with several pages of lists as part of the petition for probate. But the trust document remains private and could be of significant length and complexity.
It was considered noteworthy that Jackson's father was not named in the will. However, Jackson's mother may be a beneficiary of the trust and her estate may benefit Jackson's father. If standard tax planning was employed, assets in the trust would be used to benefit Jackson's mother without being distributed outright.
Any assets given outright to Jackson's mother would be subject to a second round of estate taxation in her estate. The fact that there are contingent beneficiaries cannot be fully assessed without seeing the trust. It is possible that certain beneficiaries would only benefit after the death of Jackson's mother, or only upon some other triggering event that might never occur. It is also possible that some trustee may have the absolute discretion to assist those contingent beneficiaries.
The will names executors for the probate estate and guardians should he be survived by children who are minors. In this case, he names his mother as the legal guardian with Diana Ross as her successor.
The unusual execution aspects include the following:
Control of Assets
- The version posted on line has the title "LAST WILL OF MICHAEL JOSEPH JACKSON" just typed across the top of the paper as opposed to any black letter typeface or the ornate trappings of so many modest estates.
- The testator's signature and the witnesses signatures were not in turn documented by a notary, so this is not a self-proving will.
- Since there does not appear to be a notary, there appears to be no notarization seal on any page of the will. Note: A simple technique for avoiding will tampering and assuring the probate court of the document's validity is to have the testator sign each page and notarize it or have all the witnesses and the testator initial each page and notarize the initials. Having only the testator's initials (as in this case) would make it easier to tamper with a page.
- It is not clear if special will paper was used or if the will was affixed with formal backing paper with staples or other fastening devices. Having the original document on specialty paper that is not readily purchased in stores and housed in backing with fastening devices that have not been tampered with becomes additional evidence of the document's authenticity. There are practitioners who routinely utilize formal rivets, ribbons, and rare parchments for the wills of estates worth $500,000 so why was such an important estate drawn up in such a nonchalant style? Was it because the author was only 43 at the time it was drawn and imagined making another will shortly thereafter?
- Two of the witnesses are named as executors in the will. Executors of such a high profile estate with such valuable assets will certainly benefit financially and professionally so it generally would be a better idea to have three completely neutral witnesses and a notary. Insofar as the will contained the private wishes of the testator, it may have been challenging to find witnesses who would be as discreet as the executors. On the other hand, not having neutral witnesses and a notary opens the probate to those who would utilize an undue influence claim as leverage against the estate. Note: One of the named executors, Barry Siegel, reportedly resigned as executor in 2003.
- Who is the literary executor? Which executor will make decisions relating to the integrity of Michael Jackson's creations and his image as opposed to his estate's finances? The will is not clear but there may be a separate trust document that provides greater elaboration with greater privacy as well.
- The petition consists of a will that is a scant five pages followed by attachments (a list of names and addresses mentioned in the will, and a list of contingent beneficiaries to the trust).
At least initially, a crisis management public relations firm announced that it was in charge of the estate. This was at a press conference staged by Joseph Jackson, the father of Michael Jackson who was excluded from (or at least was not specifically mentioned in) a 2002 version of Michael Jackson's will that was submitted to be probated.
A probate court gave Jackson's mother limited rights to gather memorabilia for a few days. But if the 2002 will is found to be valid, the executors named therein, John Branca and John McClain will be in charge. Ultimately, the trustee of the Michael Jackson Family Trust will control the primary assets of the estate.
The Unknown: These events raise questions. Did Jackson revoke his will prior to his death and die intestate? Did he fund the Michael Jackson Family Trust during his lifetime? Did he execute a new will over the past seven years?
Intestacy: Initial news reports indicate that Joseph and Katherine Jackson, the parents of Michael Jackson, filed information with the Los Angeles Superior Court that their son died without a valid will. Then a 2002 will was filed for probate by some of the executors named in the 2002 will. The 2002 will leaves assets to Jackson's trust which then benefits his three children, his mother, and charities.
Taxation: If media reports are true that the estate has assets worth $700 million and debts of $500 million, then there is a theoretical estate of $200 million that would be taxed at 45% and would owe $90 million of estate tax. With some lifetime transfers, valuation discount techniques and charitable gifts, it is possible that this tax liability may have been substantially reduced. Under a 2002 will, these funds are ultimately destined for a Michael Jackson family trust for the benefit of his mother and three children.
Paternity: Are the children Jackson's? US Magazine is reporting that multiple unnamed sources indicate that Jackson's former dermatologist Arnold Klein and Klein's former assistant Debbie Rowe are the actual biological parents of two of Jackson's children. The article quotes a 2002 interview with Rowe in which she said that she carried his children as a personal favor (and would not confirm that the marriage was ever consummated). She said, "Let me do this. You need to be a dad. You have been so good to me." Dr. Klein indicates he is not the father "to the best of my knowledge."
Guardianship: Jackson left custody of his children to his mother with Diana Ross as a back up. A court has granted temporary custody to Jackson's mother. However, two of the three children have a biological mother, Debbie Rowe, who has indicated that she may seek custody. This may mean a major diversion of estate assets.
Executor and Counsel
Generally speaking, probate attorneys, executors and judges, don't normally get a lot of media attention. The filing of petitions for letters testamentary isn't in the high charisma part of the legal profession. Could Michael Jackson's executor become famous?
Unfortunately, to get attention, an estate professional has to do something embarrassing, shocking, or infamous enough to warrant even 15 seconds of fleeting fame. The options include:
- Using your skills as a probate attorney to literally dodge bullets behind a tree as a severely disappointed beneficiary uses you for target practice.5
- Get noticed for cohabiting with your law client, starring in bizarre reality television shows with her, claiming (falsely) to be father of her child, and then get indicted for contributing to her death. (The model for this is Howard K. Stern, the attorney for Anna Nicole Smith and executor of her estate.)
- Preside over a media frenzy like the Anna Nicole burial case and start openly weeping at the bench on camera.6
Michael Jackson's 2002 will reportedly names attorney John Branca and music executive John McClain as his executors. Branca, the primary executor, was Jackson's attorney from 1990 through 2006 and was also reportedly rehired recently.
It is not clear if Jackson's current feelings were reflected in his will or trust documents. This underscores the need to frequently review one's estate plans. On the other hand, the primary control of the long-term estate will be handled by the trustee. That private document could have been revised more recently or may have other fiduciaries.
If Branca also drafted the 2002 will, there may be a potential legal challenge to his executorship. In some states, such as New York, a draftsman would have to include a special waiver in the will to document the naming of the draftsman or attorney as the testator's executor.
1 A traditional proclamation for the accession of a monarch, first used upon the coronation of French King Charles VII in 1422. Wikipedia notes the regular association of the phrase with Elvis Presley. Very recently the phrase was used as the title of an op-ed piece by Bob Greene in The New York Times on July 7, 2009. That article addresses the Elvis/Jackson parallels. He observes that only hours after the death of Elvis Presley in 1977, marketing plans were already in place and Presley's manager, Col. Tom Parker said, "this changes nothing." Parker's statement now appears to apply not only to marketing plans but his own exploitation of the estate. Then, as now, the selection of the appropriate fiduciaries for the estate is critical.
3 For an excellent resource, see, Music Copyright Law in the U.S., by attorney Ronald B. Stander (December 16, 2008) at http://www.rbs2.com/copyrm.pdf.
4 A copy of what appears to be the 2002 will of Michael Jackson has been posted on The Smoking Gun website.
5 The probate attorney who dodged bullets was ambushed while leaving court and the wild scene was caught live on camera outside of the Van Nuys, California courthouse on October 31, 2003 where cameras were on site to record footage following a court session of the Robert Blake trial. And yes, it is on YouTube under the title "Crazy GunMan Shoots Lawyer at Robert Blake Trial." So even then, the assailant and Robert Blake got more press than the attorney. The attorney's name was Gerald Curry, a highly distinguished estate lawyer who had been appointed for a court-administered trust. He survived. The gunman, William Strier, got convicted of attempted murder in 2006 and was sentenced to 25 years to life. Robert Blake was acquitted for murdering his wife, Bonny Lee Bakley.
6 Once noticed for his unusual style, Judge Seidlin retired and was reportedly considered for a television show like Judge Judy (but with more weeping).