Lessons that You Can Learn from Michael Jackson's Will

When Michael Jackson died, there was a great deal of conversation in the media about who would inherit his estate. It was believed that he had over $400 million in debts but that when his assets were sold or invested, that he would have about $500 million in his estate. Most of the “experts” on television thought that he would not have a will and that there would be a court fight between his mother, who quickly proceeded to get herself appointed as the administrator of his estate, and Debbie Rowe, who is the mother of two of his children (and his children would be his heirs under California law). It was something of a surprise when a will that was signed in 2002 surfaced and was admitted to probate. This will ended all of the speculation of how his estate would be distributed. In addition, the will named who he wished the court to appoint as the guardian of his children and named a back-up guardian in case his first choice would not or could not serve.

Since the will was submitted for probate, it became a public document and can be viewed here: http://www.docstoc.com/docs/8016703/Michael-Jacksons-Will

The will is fairly short and gives Jackson’s entire estate to the trustee of the Michael Jackson Family Trust. Since the trust agreement was not attached to the will, the world will never know exactly how the estate will be distributed.

What does the Michael Jackson will teach you about estate planning? First, there will be no squabbling among your relatives and others if you have a will. A properly signed, witnessed and notarized will that is submitted for probate will dispose of your assets as you wish, not as your family, or ex-relatives, or the lover that you never married, or a probate judge wishes.

Secondly, if you do choose to create a trust, the rest of the world will never find out how you wished to have your estate distributed. For some of us, that is an important consideration, for others, they don’t care because they believe they have nothing to hide. This will also shows us that if you set up a trust, you must re-title all of your assets into the trust. This is because if you have no assets that you own as an individual, then you don’t need to probate a will. Unfortunately, most people who create trusts do not remember to put all of their assets into the name of the trust. So they must have a will and submit that will so the assets that were not in the trust can be distributed the way that you want.

And thirdly, someone, hopefully the executor that you have chosen, knows where the will is located so that it can be probated. If you have had a will signed but cannot remember where you have stored it, then it is as if you had never signed the will. Once you have signed your will, keep it in a safe place and tell your executor and successor executor where you are putting it so that they will know where to look when the time comes.

So, here are three estate planning lessons to learn: 1) have a properly drafted, signed, witnessed, and notarized will; 2) if you have a living trust, make sure that all of the assets that you own, either as an individual or as a tenant in common, are re-titled into the name of the trustee of the trust; and 3) make sure that your executor and successor executor know where your will is located and can get the original to submit to the court.

Please feel free to forward this blog post to friends, family, colleagues, listserv members or favorite bloggers. Or if you would like to run it (in whole or in part) in any publication or quote from it, simply include my name and URL: http://www.mortgagelicensesolutions.com. No prior permission needed. To inquire about joining my list to receive my blog posts or my availability to speak to your group or write an article for your publication, please email me at RGronsky@Gronskylaw.com. Thank you!

Why Do I Need to Know About Asset Protection and How Do I Use It In My Estate Planning?

We love our children and want to make sure that they are taken care of even after we’re gone. That’s why so many of us want to leave an inheritance to our children. But how do we protect them from spending it on expensive cars, extravagant vacations, and extended shopping sprees?

Even if you don’t have a large estate to hand down to your children, how do you think an extra $50,000 or $100,000 would change their lives? Do you think that they would all invest the money wisely so that your grandchildren will have college funds and your kids will have comfortable retirements? Or do you think one or more of them will immediately run out to buy a fancy car or several pairs of expensive shoes?

Asset protection is the legal way to put assets beyond the reach of those who would like to take them away from their owners. Your estate planning lawyer knows of different ways to shield money from your children’s wasteful spending habits. In other words, you can protect your kids from themselves. That’s one reason for asset protection.

Another reason that you may want to explore asset protection tools is that your child’s spouse can go after your child’s inheritance in the event of a divorce. Typically, assets inherited by one spouse during the marriage cannot be claimed as a marital asset to be divided during a divorce settlement. However, typically, while the marriage is going well, your child will want to share his inheritance with his spouse and kids (your grandchildren) and will spend part or all of it for the good of his family. Or maybe he will commingle his inheritance with his family’s other investments so that the inheritance can no longer be considered a separate and distinct asset of your child. All of your children may seem to be in happy marriages right now but who can say what will happen in 5 years? In 10 years?

Another possible concern that you may have about your child losing the money you pass on to him is if he is sued. Does one of your children own his own business? People sue businesses all the time and your child has to follow all the rules of limited liability to ensure that only the company assets are at risk and not his personal assets as well. How does a business owner make sure that his personal assets aren’t at risk if his business is sued? Is the business a corporation or a limited liability company? These forms of running a business are the starting point for ensuring that your child’s personal assets don’t get seized by someone suing his business. Is your child a doctor or lawyer who could be sued for malpractice? Then, he may possibly get sued individually for malpractice and his personal assets are at risk.

Even if your children don’t own their own businesses, they can get sued for any number of reasons. If your child is in a car accident and the judgment is bigger than the amount of insurance he carries, the judgment can be satisfied from your child’s personal assets (including the money you leave to him). If someone slips and falls on his lawn and then sues, the injured person can collect against any of your child’s personal assets.

In order to be effective, asset protection techniques must protect against liability, must not be in your child’s name, and must be done at the right time. Talk to your estate planning lawyer about how to help your children’s spending or losing their inheritance.