Families across the country will come together to celebrate the Thanksgiving holiday next week. As a Forbes article recently explained, the holiday is a perfect time to discuss estate planning issues, because the planning is all about helping out one’s family. One of the main goals of an estate plan is to ensure that surviving family members will be taken care of and not forced to endure stressful, complicated, and costly procedures to get financial affairs in order following a death.
One way to broach the topic over Thanksgiving dinner, say the article authors, is to frame the talk in the context of high-profile celebrity stories. The article includes a list of the “Top 5 Celebrity-Based Estate Planning Conversation Starters.” Kim Kardashian’s story made the list to highlight the role that marriages have on one’s estate. The socialite ended her seventy two day marriage last month. Of course all marriages (short and long) have significant effects on one’s estate planning documents, and estate planning attorneys should be consulted when a marriage is entered into or ended. It is smart to make appropriate changes even before a divorce is finalized; otherwise the estranged spouse may still retain control if a death occurs before the separation is official.
The feud over Michael Jackson’s estate is also ripe with lessons. It was explained how the music pop star created a trust before he died and named his mother, three children, and personal charity as beneficiaries. Two trustees were named to help manage the trust. Our New York estate planning lawyers help clients in our community create these legal entities all the time. However, besides creating the trust, it is vital that the trust be “funded.” Funding is the process where assets are moved from an estate and into the trust. Failure to do this makes the trusts seemingly ineffective. That is where problems have arisen for the Jackson estate.
Michael Jackson’s trust was never actually funded. That means that there was essentially nothing for the beneficiaries to receive–even though the singer’s estate continues to grow. The deceased star’s estate made a staggering $120 million last year alone. The unfunded trust problem has resulted in much in-fighting and legal wrangling. Also, because the property was not in the trust, it still had to pass through the probate court. It was only this week, two and half years after his death, that those in charge of the late singer’s estate agreed to move $30 million from the estate into the trust. However, this step still does not guarantee that any of those assets will be given to the trust beneficiaries. The trustees still control the assets in the trust and will determine when any assets are distributed to beneficiaries and how much will be given.
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