Boston, MA (PRWEB) February 21, 2013
More than three years after the death of Michael Jackson, the trust fund for his children, Prince, Paris, and Blanket, ages 15, 14, and 10, has to yet be dispersed. His estate is $ 600 million and Estate Street Partners (ESP) has this advice in Feb 2013 for others to avoid a Jackson-like disaster. Rocco Beatrice, Managing Director of ESP, founders of the UltraTrust irrevocable trust, explains that because of poor estate planning Michaels family will have to still wait years until his probate, estate taxes, creditors claims, and other legal battles are finalized.
Mr. Beatrice studied in detail Jacksons estate plan and graded it a D Minor. According to the NY Daily News, Mr. Jackson crafted a pour-over will and revocable trusts for each of his children and Katherine, his mother and the guardian of his children.
A will is only good for stating who the guardian of the children will be. Other than that, its a poor way to pass on assets, especially significant ones like Mr. Jackson had, clarifies Mr. Beatrice.
The pour-over designation basically describes the will as one that pours over the assets into one or more trusts after death.
Since Michael Jacksons death, the estate lawyers have decided hundreds of motions, matters, and claims. When a person dies with even assets of $ 500,000, everybody wants a piece of the pie. The government wants the taxes, the creditors want their money, the lawyers, appraisers, and accounts involved with the probate want their fees, and lastly, the family gets their share, explains Mr. Beatrice. The reason Mr. Jacksons assets have been tied up in probate court for so long is because there are many issues to sort out. Every single creditor has an opportunity to make and negotiate a claim, property has to be sold and/or maintained, and challenges have to be heard.
For the Jackson estate, the assets still have not poured into any fund. The children are receiving almost a seven-figure allowance – annually. This includes the mansion, private schooling at the famous Buckley School near Beverly Hills with a yearly $ 29,000 tuition and vacations. These expenses amount to $ 70,000 per month according to the NY Daily News.
Family members are wondering where all the money is going. According to the NY Daily News (see sources), they are worried that people are stealing money.
If Mr. Jackson utilized irrevocable trusts like Steve Jobs, the family could be using their share right now. No waiting, no estate taxes, no public scrutiny, no courts, and asset protection, states Mr. Beatrice.
The Supreme Court ruled in Estate of Sanford v. Commissioner, 308 U.S. 39 (1939), that a transfer to a revocable trust is not a completed gift. This means that everything is subject to probate and estate tax.
ESP estimates the estate will be taxed about $ 200 million. In a good estate plan, one can mitigate the estate tax altogether. The Jackson lawyers were likely more worried about their own paychecks than doing the right thing by Mr. Jackson. Tying up the Jackson estate in probate court is very profitable for Mr. Jacksons attorneys and could have easily been avoided by using the Ultra Trust, posits Mr. Beatrice.
An irrevocable trust, like the UltraTrust, should not be confused with a revocable trust. The revocable trust allows the grantor of the trust to change anything at will, resulting in an unprotected estate.
Even when someone asks for an estate plan and has 1/100th of Mr. Jacksons assets, I highly recommend an irrevocable trust. It is a completed gift; therefore, the assets in the irrevocable trust are outside of the persons estate and not subject to the estate tax.
If a person files a lawsuit against Michael Jacksons estate, the assets in the irrevocable trusts are outside of his estate and not available to creditors or lawsuit winners. Revocable trusts dont afford this same asset protection
Irrevocable trusts have stood up against the I.R.S. [Dean v. United States], bankruptcy court [IN RE: Jane McLean BROWN], divorce [Cooley v. Cooley] and many different types of creditors (see sources).
These irrevocable trusts provide asset protection from future lawsuits and only pay out via incentives and age milestones (21, 30, 35, and 40 years old) as well as protect the money from themselves. Nobody believes a 15 year old should have access to 60 million dollars, so the trust with an independent trustee and trust protector protects and provides throughout their lives, explains Mr. Beatrice.
Michael Jackson came very close to failing his family at death. Im glad Mr. Jackson could afford to make a donation to the government, but most people dont want to throw away 35% to estate taxes (55% in 2013). They want to keep it in their family. explains Mr. Beatrice.
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