Michael Jackson - The Unfunded Trust

Joseph Esry and I recently taught a continuing legal education course to other attorneys on Ethical Dilemmas and What We Can Learn from Famous Estates. I wanted to share some of the insightful lessons learned during my research. With the recent IRS victory, I thought Michael Jackson’s estate would be a good place to start.

Michael Jackson did take the time to create a trust and will but failed to fund his trust. Not taking that extra step to make sure his trust was properly funded opened his estate to a twelve-year (and still ongoing) public probate battle. Initially, his siblings and father, who were expressly disinherited, contested the filed will stating it was false and fraudulent. Their claims, however, didn’t hold traction in court. Plus, all four filed wills (yes, four), were almost identical, and each one expressly disinherited his siblings and father. Even if all four wills had been deemed invalid, Michael Jackson’s children would have still been the ones to inherit his estate. More recently, the IRS aggressively contested the value of the Estate’s intellectual property (Michael Jackson’s image and likeness and ownership interests in Sony/ATV). After a four-year trial, the U.S. Tax Court ruled that the IRS overvalued the Estate assets by $370 million dollars and found the assets were worth close to $11 million. Even with the wins, the Estate paid heavy costs for the years of litigation.

The learned lesson from the 2,000 plus probate documents filed in the Michael Jackson

estate is do your homework and make sure your trust is funded. If Michael Jackson had taken the necessary steps to make sure his trust was funded, his estate could have been privately administered and avoided the unnecessary costs and time spent dealing with frivolous and aggressive claims. That is why our firm takes the time to review asset information and provide you with funding instructions. If you have questions about funding, or acquire new assets, please call us.