Trust. Will. Estate Plan. These are terms you have likely heard but may not have clarity on what exactly they do or what legal tool you need. This is common. Our clients come to us knowing they want to protect their children, but unsure of what next steps to take.
Let’s look at Michael Jackson for a minute. His name may bring to mind Thriller or the Jackson 5, but Mr. Jackson was also a father to 3 minor children. He understood the importance of planning for the future of his kids. He created a trust to protect his estate for the benefit of his children and his mother. He also recognized that young adults are not always capable of properly handling large amounts of money, so he instructed that upon his death his children should receive specific amounts at specific ages.
He did this part right.
So what went wrong? Mr. Jackson failed to fund his trust.
What does this mean? Jackson took the time to plan. He mapped out a trust that protected his assets, his children, and his mother. But since he did not properly fund his trust by changing the titles of his assets from his name into the name of his trust, his entire estate needed to proceed through probate.
This caused several significant issues…..
First and foremost, his $600 million estate is essentially “frozen” and cannot be distributed to Jackson’s named heirs. The plan Michael designed in hopes of protecting his loved ones will not come to be. His children and his mother have been living off an allowance that has been managed by the estate executor’s and overseen by a judge for over a decade.
Second, the estate being probated means the estate is now open to litigation. Jackson’s siblings have contested the distributions of his estate, alleging fraud, as being omitted from the distribution plan.
Third, a funded trust provides privacy and asset protection. Probate is a matter of public record and can be a lengthy and expensive process. Since properly funded trusts avoid probate, they are kept private. In addition, assets in a trust cannot easily be seized by predators or creditors.
A properly funded trust is developed with the intent to avoid probate and to ensure that your assets are distributed in accordance with your directives.
So what can we learn from the King of Pop’s story? Fund your trust. If you have questions or want to make sure you have the right plan in place- call our office. We are here to offer guidance and give you confidence in your estate plan.
