In the wake of Michael
Jackson's death last week, his three young children, Prince Michael,
Jr., Paris Katherine Jackson, and Prince Michael Jackson II (aka
"Blanket") face an uncertain future. On Monday, a Los Angeles County
Superior Court Judge granted the children's grandmother, Katherine
Jackson, temporary custody of the children. A hearing on permanent
custody was set for next week. Katherine Jackson also filed a petition
requesting to be appointed the administrator of the estate. Most
recently, a will signed by Michael Jackson in 2002 was filed in court.
I noticed that immediately after Jackson died, scores of former
"Jackson family attorneys" started to appear on the evening news
broadcasts to give their perspective on what it all means.
Everybody has an opinion!
For those of us who provide guidance to people administering estates, I've heard this situation referred to as a sort of legal "Woodstock"! We just can't get enough.
Most of the estate administrations we guide do not result in litigation, and the facts aren't nearly as compelling or unusual. In fact, every day, people die, and the family picks up and takes care of the children and the money without all the drama, or fighting or litigation. That is what usually happens!
That's not how it's going to work with Michael Jackson's estate. There's too much money, too many creditors, and too many assorted advisors, attorneys, and other "hanger onners!"
Here's what is going to happen: litigation, and lots of it.
This case is going to continue for years. There is a tremendous amount
of money involved, young children who need to be cared for, and
powerful and wealthy family members. In addition, it looks like there
might be a dispute over who is going to be in charge of the estate. It
all adds up to a toxic brew that is going to result in millions of
dollars of lawyer's fees, court costs, bond, and executor/administrator
fees.
What will happen to the children? What will happen to the money?
Because Jackson's death was only a week ago, there are still many
unanswered questions, and the news is changing rapidly. On Wednesday, a
will signed by Jackson was filed in the court. I've downloaded a copy
already (I warned you, this is my estate planning "Woodstock!") and
taken a look. Until the will was filed, there were allegations that
Jackson's lawyers were keeping the will from his parents, Joe and
Katherine.
In any case, a dispute might be brewing over
whether the three non-family members named in the will are going to be
appointed the executor of the estate or whether Jackson's mother,
Katherine, will serve.
Now that Katherine has asked to be appointed the administrator of the estate, and a will has been filed, the judge will have to evaluate the evidence and determine whether the will is valid. If the judge determines that the will is valid, the judge will appoint the people named in the will to serve as the executors of the estate. If the will is not valid, the judge will have to make a determination as to who serves as the administrator.
The fact Katherine asked to be named the administrator of the estate (and not the executor) suggests that she did not believe there was a valid will at the time she made the request to be appointed the administrator. An adminsitrator is only appointed if there is no will or the will is invalid.
Whoever serves as the executor of the estate will be entitled to a significant amount of compensation based on California's statutory fee schedule for executors. These fees would be in addition to attorney fees.
At the same time, people are speculating about whether Jackson's three children are his biological children and whether Debbie Rowe is the biological mother of the oldest two. Did Debbie Rowe terminate parental rights to the children? Does she want the children returned? There's a large degree of uncertainly.
I've
noticed that commentators have been making all sorts of suggestions
regarding the three Jackson children: "They should go back to their
biological mothers; they should go to Janet (she's the most stable);
they should never go to Michael's father, Joe, because of alleged
abuse; or the children should live with their nanny because they feel
most comfortable with her and call her mom."
If a custody
battle ensues over the children, the judge will give great deference to
the fact that Jackson named his mother to serve as guardian of the
three children. Jackson's nomination in the will is not the final word,
however. If there is a conflict, opposing parties will present evidence
to the judge, and the judge will decide based on the evidence presented
in court.
Guardianship appointments are not automatic. The
judge must still be satisfied that the appointment of a particular
legal guardian is what is best for the children. If the judge finds
that Debbie Rowe was the mother of the two oldest children and did not
terminate parental rights, she would likely obtain custody even if she
isn't the biological mother of the children. Whether she will seek
custody is an open issue, but it is possible.
Whoever is appointed guardian will likely be required to go to court each year and report on the well-being of the children. The court-appointed guardians will serve until each child attains age 18. At that time, they are emancipated and will no longer be under a court-supervised guardianship.
The person who obtains guardianship of the children may or may not be in charge of their finances. Jackson's 1992 will indicates his mother should serve as guardian of the person and estate of his chidlren. The will indicates that the entire Jackson estate should go to the Michael Jackson Family Trust; it doesn't specify who the beneficiaries of the Family Trust are.
It
will be interesting to see whether Jackson's assets are already titled
in the name of the Family Trust (if so, those assets will avoid
probate) or whether most of his assets will go through the probate
process before being distributed to the Family Trust.Presumably, the
assets in the family trust will be used for the benefit of Jackson's
three children.
If
the children inherit any money directly (i.e. not in a trust), the
court will appoint a guardian to supervise the children's financial
interests until each child reaches age 18. The court will exercise
strict supervision over any part of the estate that is intended for the
minor children. The investment choices will be restricted, a bond will
have to be procured at great expense, and the court will require yearly
accountings and perhaps permission to make any major distributions.
The probate process in California is both expensive and burdensome. The
current situation is a toxic mix of money, celebrity, and a strong
willed group of family members and professional advisors, who are
likely to create drama for years to come and at great expense.
Given Jackson's diverse business interests, the sudden nature of his
death, the large number of creditors who will be seeking compensation,
I'm not sure there is anything Jackson could have done to avoid
litigation upon his death.
Most families will never have to
fact the kind of litigation that is going to ensue in this case.
Regardless, I hope this story is a wake up call for all parents with
young children. If you haven't named guardians already (both short term
and permanent), do so immediately. Make it as easy as possible for your
family if something should happen to you. Leave clear instructions
about who you want to be in charge of both your children and your
money. Let your loved ones know how you would like your children to be
cared for.
R.I.P. MJ.
© 2009 The Estate Planning Law Group
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"© 2009 The Estate Planning Law Group. Written and edited by Kirsten Izatt and Bill Deitch. Bill and Kirsten's mission is to make the world a better place by providing a lifetime of ongoing guidance and counsel to people who want to make the very best decisions about how to plan for and protect their families through estate planning. Get their revealing, enlightening, and sometimes humorous "Family Wealth Builder" e-zine at www.FamilyWealthBuilderNewsletter.com."
