According to TMZ.com the trust estate will be divided:
Katherine Jackson will get 40% of the assets.
Michael's 3 kids will get another 40%.
Remaining 20% goes to several children's charities. Charities have not been designated yet and are not specified in the trust.
A Wall Street Journal blog reported that a Merrill Lynch survey showed that the world millionaires had fallen 15% from 2007 to 2008 and there were now 8.6 millionaires in the world. They defined a millionaire as someone who had $1m in investable assets. Those individuals saw their assets decline 20% in the year of their study.
The Super rich as defined as $30 million in investable assets had their ranks drop by 25% from 2007 to 2008 and the overall assets dropped 24%.
The Super wealthy consisted of less than 1% of the millionaire population although it had 34.6% of the millionaire assets.
The United States millionaire population lost less money than most countries falling 19%, the U.K. had a 26% drop, while Russia dropped 27%, India fell 32% and Australia and Canada both topped 23%.
Those least effected include Brazil, with a 9% drop, and China, with a 12% fall.
The US millionaire population is back at around 2004 levels.
As this article mentions Michael Jackson's mother was given temporary guardianship of all three of Michael's children. For Debbie Rowe the mother of two of the children her address was listed as "unknown". Strangely instead of unknown regarding who the mother of the 3rd child was the Jackson petition had said none regarding the mother.
A court hearing is schedule for August 3 to determine where the who is best for the children to have as their guardianship. Ms. Rowe's attorney has indicated she would likely contest custody of the children and guardianship of her two children with Michael based on being the natural parent but gave no further information.
Paul L. Caron a law professor at University of Cincinatti had reported about a Supreme Court case concerning the Estate of Andrews in 1994 which held that based on Internal Revenue Code Section 2033 that the right of publicity was includable in the estate of the decedent. He also proposed the idea that estate planning to resolve this issue could be done. He suggested gifting the right to a trust towards the start of the individuals career or fame so the increase in value would not be includible in their estate. Although it was not specifically mentioned the transfer would of course need to go to be gifted to an irrevocable trust so that the celebrity had no rights to alter, amend, or revise their gift as they would if it were to a revocable trust for which they would likely be a trustee in which case it would be includible just as a life insurance policy would be if transfered to a revocable trust but not if properly devised to an irrevocable life insurance trust. Additionally he discussed how it is important that the rights of a celebrity be respected if it was someone who valued their fame and sought the spotlight that it may be used more extensively in the estate while someone who shun the spotlight during life would likely not want the right of publicity used to the contrary after their death although the IRS values the right at its fair market value not taking into consideration how it is intended to be used and a validly executed disclaimer could sometimes make sense he mentioned. A link to his comments can be found here. As there does not appear to have been any estate planning for Michael Jackson and a will cannot even be located yet although the value of the estates right of publicity will be quite extensive and estate taxes are due within 9 months following the date of death. This will cause a potential disaster for an estate which has debts of around a half a billion dollars already, numerous disputes and litigation issues which will need to be resolved and assets worth up to around a billion dollars prior to the value of the right to publicity but with no spouse his estate will receive just a $3.5 million estate tax exemption and while Paul McCartney or someone may buy the Beatles catalog which is the largest estate asset but it is not marketable in the same way that 100 shares of IBM stock would be and liquidating assets within the time period to pay estate taxes could be problematic. The valuation issues concerning some of the assets will also be an interesting situation to deal with as he had some unusual assets.
National Law Journal reports that there will be a number of intelectual property attorneys overseeing whether anything from the moonwalk to Jacksons face, image or other rights of pubilcity are being violated and that the estate is likely to protect his image aggressively from those who are seeking to make a quick dollar including even those who come out with shirts having his face on them which already began.
Law.com reports that a history of litigation concerning Michael Jackson will carry over to his estate which will face an extended amount of estate litigation and need to deal with extensive disputes and contests as he had dealt during his life.
As this Blog reports the actress / model from the thriller video joined the Litigation party of suing Michael Jackson shortly prior to his passing. She was seeking further compensation for the video as the director had also sued his production company seeking to litigate the amount that he should have received which was a dispute between himself and Michael Jackson.
Money Magazine also reported regarding how much the concert was intended to make and how there was already litigation which may occur from the tour.
Billboard.com referred to Michael Jackson as the king of litigation a play on his nickname of the king of pop and mentioned that some of the ongoing lawsuits that he has will now be handled by his estate who will have to continue to pursue or defend a number of various disputes. Among them include a 75 year old African singer suing despite having already reached a settlement for a portion of a song in 1983 that used borrowed lyrics. He then allowed Rihana to use a song which had that portion of the song so they were both sued in France last February. Given that medications may have played a role in his passing it is also interesting to note that he was once sued for not paying a prescription drug bill which was in excess of $100,000.
He was even sued in late December of 2008 by a woman claiming to be Billie Jean Jackson (although her name is actually Laron Poulis) arguing she was Billie Jean from his 1983 hit Billie Jean not my lover but she in fact was and that they were married and she was the mother of Blanket. This time she sued for $1 billion on behalf of the daughter and joint custody. She had sued him decades previously claiming 3 children of hers were his as well but lost. He is also being sued by concert promoters and according to the Billboard article has been sued by people connected with Wall Street as well as Sotheby's. Given these lawsuits, the custoday issues with the children and debts expected at around $500 million and assets including some Beatles songs worth around a Billion dollars and no will or estate planning documents have been found it will be an interesting and challenging estate to unravel and resolve all of the disputes involved.
As Indiana News Center reported the family of Michael Jackson plans to fight for control of his estate and his children in Probate Court and will pursue any estate disputes that arise.
Yahoo reported that Katherine Jackson the mother of Michael Jackson will seek control of the estate and had filed documents to do so shortly after having filed documents to serve as the guardian of the three children of Michael Jackson. California Probate court will have jurisdiction regarding these matters.
California law provides if there is no will as he was not married it would pass to his children and the guardian of the children would control. Debbie Roe the mother of two of the children may seek to contest who receives custody regarding the children. She had terminated her rights to the children but then had subsequently sought to regain rights. The judge will determine what is in the best interests of the children. The 3rd child of Michael Jackson was from a surrogate who had no relationship to the child and in that case seems clear it will go to the Jackson family as they have a relationship with them and the woman never acted or was intended to be a mother to the children. The judge may determine that the interests of the mothers were waived and they belong together and with the Jackson family.
As a Fox News Fox News article points out this has some similarity to the Anna Nicole Smith situation in which a relative who had been distant was seeking custody and there was a dispute from another relative although in that case it was a lot easier decision given that there was a father who had not waived his rights. They also point out that there are rumors of Michael's mom who is in late 70s being in poor health and the court having thrown out the agreement in which Ms. Rowe waived all rights on a technicality although it was never further pursued and the consensus in this situation was given the closer relationship the family had with the children and keeping the siblings together as well as the contract it was more likely than not the Jackson family would prevail if they were considered fit. Also a former family attorney Debri Opri who assisted Larry Birkhead mentioned even if there was no will that Jackson may have otherwise legally documented who he wanted to have his children. That is a frequent reason for people with minor children especially in his situation to prepare a will though is to provide a preference for whom the guardian should be. A final note of interest was that stores have noted that his record sales have surged since his death last week and this may help the estate to pay off some of the massive $400-500 million in debt it faces.
This video on Yahoo is of a forensic pathologist who discusses what the autopsies are likely to show regarding Michael Jackson.
Joe Ruble reported of a change in Florida Property tax law where Florida Property owners do not have to prove that the assessment is wrong in which only 10% of those disputing their property tax assessment won their disputes in 2007 (other than Dade County) which had a different type of dispute process. The new law will allow allows taxpayers to merely bring more compelling evidence of their assessment in order to prevail with a change in their Florida property tax valuation. Florida Governor Charlie Crist said this was intended to bring fairness back to the Florida homeowners. For the full article see New law helps property owners dispute tax assessments.
In the article Spouses automatically inherit under new law it was mentioned that New South Whales Australia changed their intestate succession laws. While it will not impact my clients the article was of interest to compare how things are there versus Florida and the US and the reason for acting.
The state attorney General John Hatzistergos said "When people die without leaving a will, there is the potential for legal dispute as relatives fight over the estate". In Florida and most US states while there is typically the chance for a dispute whether or not there is a will or trust it cannot be solely because there was no will in the sense that the intestate succession law is clear it would either go one half to the children and one half to the spouse or if they were the children of both parents the first $60,000 goes to the spouse and then half and half. I do not see where it would cut down any disputes as reasons to dispute of lack of capacity, or undue influence, fraud or issues that may be asserted in a will are no present and with the change they proposed it would still not change the most likely disputed situations when there are spouses who are not the surving childrens parents.
It is interesting to note however that they had a poll which showed that 75% of the time people who had a first marriage situation wanted there property to go to the spouse then to the children. When estate tax is not an issue I have found that to be typically the case as well that the parent wants it to go first to the spouse then to her kids and which is why Florida makes the distinction in the amount that the spouse gets depending on whether there are kids from someone other than the surviving spouse or not.
Likewise their poll showed just 30% percent want all to spouse if there are kids from a prior marriage. Those numbers sound consistent with numbers I have dealt with practicing in both Florida and Illinois.
It is a good idea to have the Intestate succession laws reflect the likely intent of the testator.
An additional issue mentioned in the article was that 45% of people in the survey did not have wills. For clients that I deal with as an estate planning attorney will all have documents in place and almost always avoid probate although from clients in general throughout the US it would be interesting to hear the latest stats the last I had read the ABA at one point had done a survey which showed nationally well above half of adults did not have a will.
After years of disputes and litigation regarding the terms his trusts and will contests a settlement to distribute the trust and estate assets was reached.
His charitable trust will receive 50% of the assets and help needy kids in South Carolina and Georgia.
Tomi Rae Hynie Brown was determined to be his wife which had itself been litigated since it was argued she had not been properly divorced from her prior husband so it was argued that the marriage with James Brown should have been invalid. She however received 25% share along with her son James Brown II who was a minor and there had been questions of whether that had even truly been James Brown son. Neither one had been provided for in prior wills and trusts which they contested and were disputing in the litigation. They had rights as pretermitted heirs since the marriage was after the will and so was the birth of the child. This would allow them to receive their intestate share. Even if the will had not provided for her and was done after the marriage she would have rights to his property as an elective share unless there had been a prenup she would have elective share rights as a spouse.
James Browns 6 adult children split the remaining 25%.
The estate reportedly has limited assets currently though and had held an auction which raised $850,000 in order to help pay debt of the trusts and estates.
There have been reports of breach of fiduciary duty by the trustees who reportedly have not given full accountings and are said to have mismanged the trust assets. They did not approve of the settlement and are appealing.
His wife and her attorney mentioned that the family and charity were happy to move forward after the trust litigation battles of the past few years and just wanted to work together to continue to enhance his image. The image of the godfather of soul will likely be the most significant estate asset. The estate of his friend Elvis Presley for example earned $52 million last year despite his death decades ago. By contrast even some of the biggest celebrities who are alive and actively earning such as Justin Timberlake and Madonna made ten or more million less according to the annual list of top earning deceased celebrities in Forbes.
This trust and estate settlement proposal had been worked out months ago and submitted to the probate court for approval although the probate judge in South Carolina overseeing the case finally reviewed and approved it. Unless it is impacted by the appeal of the trustees all the litigation concerning the trust and estate can finally be put to rest. In this case as with some other large celebrity cases there had been numerous lawsuits which needed to be resolved as well as determining what the will and trust said then all the parties agreeing to settle the disputes.
As James Brown liked to say and those who have finally been able to settle the trust and estate litigation disputes that had been in probate court would likely have said "It feels good".
The following information is taken from A. Charles Schultz GiftLaw E Newsletter sent out May 26, 2009.
The potential tax increases to pay for healthcare reform may include the following:
1. Employer Health Care Exclusion -- The exclusion could be capped or phased-out for higher-income employees. For higher-income persons, part of their medical premium will be taxable, even though paid by the employer.
2. Income Tax Deduction -- The 7.5% floor could be raised to a substantially higher level and reduce the value of the deduction.
3. HSAs and FSAs -- The health savings account (HSA) or flexible spending arrangement (FSA) could have reduced contribution limits. FSA fund distributions could be limited to qualified itemized medical deductions.
4. Medicare -- All state and local employees may be required to participate.
5. Alcohol Tax - An increased and uniform national tax may apply to alcohol.
6. Soft Drink Tax -- A new tax may be levied on sugar-enhanced beverages.
7. Top Brackets Increase -- The current top 35% and 33% brackets may rise to 39.6 % and 36%.
8. Itemized Deduction Limits -- Higher income individuals may have a 3% floor on deductions and would also lose their personal exemptions.
9. Capital Gains Tax Increase -- The 15% capital gains tax rate may be increased to 20%.
10. Estate Tax -- Retained with $3.5 million exemption and 45% rate.
11. Estate Tax Discounts -- Valuation discounts reduced or eliminated.
12. Grantor Retained Annuity Trusts -- GRATs limited to ten years or longer.
As the AP report on CNN mentioned the California Supreme Court upheld the ban on same sex marriage but also provided that the 18,000 marriages which happened prior to the ban remain legal.
Florida law has an unusual adoption statute in that it allows that anyone a child or an adult may be adopted. However, Florida statute 63.042(3) says that No person eligible to adopt under this statute may adopt if that person is a homosexual. That was likely intended at least in part to avoid people from seeking to create an informal backdoor to same sex marriage family rights since same sex marriage is not legal in Florida.
As Mike Owens of KSDK channel 5 in St Louis reports one of the last surviving munchkins from the movie the Wizzard of OZ recently passed away at 89. The family has asked for accounting of his assets and accused the caretaker of obtaining a Power of Attorney when he lacked mental capacity to have given it, kept him from his family continually changing the phone numbers as soon as they reached him and improperly taking assets of which they believe there was a $1 million. The caretaker denies that there was any wrongdoing. It is being investigated by the state and is an issue before the Probate Judge currently.
Here is a video of the above abuse of power of attorney claim.
Although this situation is not a Florida matter the Florida statute on Power of Attorneys is here. Florida law requires that a person have mental capacity when executing a Power of Attorney as likely every state would and that the agent for the power of attorney act in the best interest of the principle and not there own best interest. Sadly based on articles I read and phone calls I receive abuse of power of attorneys happens too frequently with the agent of the power of attorney breaching their fiduciary duty.
Over the years as a Florida Attorney Attorney I have heard and read about problems that the Connecticut probate court has experienced with a system set up several decades ago having a significant number of local courts so there have been 117 probate courts.
As Rick Green points out in his Hartford Courant article there is about to be significant change to the system. There is legislation that the Connecticut house has approved which would eliminate 67 of the probate judges positions and sharply reduce the number of probate courts. The court system there is near bankruptcy and there have a number of problems over the years so they are seeking to fix those problems and the governor has already indicated support for the proposed legislation to reduce the size.
Despite the significantly larger population by contrast Florida has vastly fewer than 117 probate courts. In Florida the significant counties have there own probate courts so there is a Broward County Probate Court and a Palm Beach Probate Court and in Palm Beach there are northern, southern and central regions most counties just have one location (although there are some regional branches that are wired up so probate attorneys could appear ex parte but they do not have a seperate court or full time judges there. Florida has 67 counties and fewer probate courts than that. Like Connecticut and probably a number of other jurisdictions though the Florida court system had some financial issues which are being addressed through raising fees for nearly all circuit court matters in order to balance the budget.
In a rare situation as reported here by Aol a Texas woman recently gave birth to twin boys who were born with different fathers. The hospital had said it is extremely unusual and they believe the first time and possibly the last it will occur in Texas. The woman had one of the children with her fiance and one with a guy she had a fling with. After the children looked very different a DNA test was done which discovered what had happened. The fiancee was going to raise them both as his own children.
In Florida there is a Florida statute that says that the child will be a child of the adopting parent and a natural kindred of all of the adopting parents family for inheritance purposes but shall lose all inheritance rights to the biological parent who would no longer be treated as the parent so assuming he were legally adopted and Texas had a similar statute or an inheritance issue in Florida becomes an issue that would be the result.
As this Bloomberg article points out this was a change from most bank closings in that private capital took control of a bank. It was part of a way to get the most bidders involved so it would cost the FDIC less in loses despite having lost $4.9 billion as a result of the collapse. This was the second largest banking failure since the financial collapse began after California based Indy Mac. A consortium of large private equity firms Carlyle Group, Blackstone Group and others are putting up $900 million to take over the bank and will be responsible for some loses along with the FDIC. It was heavy involvement with the option arms and adjusted rate mortages where the loans were increasing while the properties were becoming less valuable that drove them into bankruptcy. Florida real estate has plunged even further than most of the country and it hurt the bank and its 85 branches.
Fortunately there will not be large changes to the bank or its employees anticipated. While there are no immediate layoffs or planned closings the bank has announced it is likely to close down some branches in the west coast of Florida while opening more branches closer to its home base of South Florida and Miami. The bank was able to reopen the next day and operate in a smooth manner so banking customers were generally not impacted by the actions. Also taxpayers will not be impacted as the FDIC receives its money on fees it imposes on member banks and not from taxpayer funds.
