Mark Cornwall: Jackson Family Dynamic Complicates Estate
http://www.noozhawk.com/noozhawk/article/070809_mark_cornwall_jackson_family_dynamic_complicates_estate/
By Mark Cornwall
You never know what is going to come up with your revocable trust after you die
In case you haven’t heard, the “self-proclaimed” King of Pop has died, and with it died the moniker of “self-proclaimed.” Michael Jackson now enjoys full reign as the King of Pop.
First question: Did he leave a will? Second question: Did his mother, by filing court documents to immediately gain custody of the three children, cause her to indirectly violate the “no-contest clause” by challenging the validity of Jackson’s will of 2002, by representing her son died intestate? This alleged “contest” to the will, claiming her son died intestate (without a will), could be interpreted as a will contest by a beneficiary (his mother). The result of such an interpretation would be that Jackson’s mother will be penalized and take nothing under the will, regardless of the money, or her relationship as an heir.
This would be ironic given the news through the media that Katherine Jackson, 79, is to receive 40 percent of all the money from the Jackson estate as guardian of the children, who receive another 40 percent, with the last 20 percent going to charity. The money is allegedly to be managed and allotted to her and the children through a trust managed by Jackson’s longtime agent, and the attorney who drew up the will — which immediately brings up the issue of conflict of interest.
The likelihood of the mother being cut out of the will, which was conceivable according to law last year, will be replaced by a new “no-contest” law on Jan. 1, 2010, and is retroactive to 2001. The new law is much more forgiving of Jackson’s mother jumping the gun, as long as she did so with a reasonable belief that Jackson did die intestate, although this has been proven false, and that there was a reasonable likelihood Katherine Jackson’s relief would be granted.
This will no doubt be the probate of the century, thus far. What it brings into focus is the fact that after you have completed your revocable trust or last will and testament, you then die, which triggers a completely new set of laws that will interpret the trust instruments that became irrevocable upon your death. This is called administrative law.
It is amazing that Jackson’s will could be comprehensive enough to ward off all conceivable interlopers who may want a piece of his alleged $500 million estate, such as the biological mother of the children. A simple disinheritance is not sufficient. The former wife is not his to disinherit.
The renowned “trust administrator,” attorney David Gaw, coined it best when he called it “breaking the living trust myth.” Gaw writes, “No matter how much client education takes place at the estate planning stage, it is not unusual to hear comments such as: ‘I don’t understand why this is so difficult and expensive. I thought we got a living trust to avoid all this.’” (“Estate Planning Through Administration,” 2009)
Jackson’s estate administration was apparently bound for probate anyway because it is a will, one creating an irrevocable trust upon Jackson’s death that takes the blended family dynamic to the extreme. Add in the fact that no entertainer has sold more albums on a daily basis since Jackson’s death, and all the hands that dip into that capital asset from the record sales, and you have two trustees of the alleged trust for the children who have their hands full like no others.
Here are a few duties of the trustees of any irrevocable trust:
» Loyalty to Jackson
» Duty to administrate as instructed
» Deal impartially with all beneficiaries
» Avoid conflicts of interest
» The possibility of making a distribution or payment prohibited by law
» Take control and preserve trust property
» To make trust property productive
» To keep trust property separate and identified
» Enforce all claims
» Defend all actions
» Co-trustees have duty not to allow a co-trustee to breach the trust
» Duty to use separate skills for benefit of beneficiaries
You never know what is going to come up with your revocable trust after you die, such as what Diana Ross might have to say about being guardian of three children while in her 70s.
— No opinion herein is a “marketed opinion” and no information provided herein can be used to avoid tax penalties for which the taxpayer would otherwise be responsible. Mark S. Cornwall has lived in Santa Barbara for more than 30 years and practiced law here for 25 years. He is accepting new clients. His book, Estate Planning: The Heroes Way for Baby Boomers, can be purchased via his Web site, www.MarkCornwall.com; Amazon.com; or locally at Chaucer’s and Borders bookstores. To schedule an appointment, contact him at .(JavaScript must be enabled to view this email address) or 805.845.7558.
http://www.noozhawk.com/noozhawk/article/070809_mark_cornwall_jackson_family_dynamic_complicates_estate/