Marsala Law Firm, A Professional Corporation

Category: Probate

  • Celebrity Estate Plans Series Part 1 of 4: Michael Jackson 

    Celebrity Estate Plans Series Part 1 of 4: Michael Jackson 

    What is it about celebrities that always draws us in? For whatever reason, we just can’t resist a good, juicy celebrity story. Maybe it’s because we can relate in some way, or maybe we feel like we can’t relate and that’s what makes celebrities interesting. Their lives always seem attractive but somehow… just out of reach. 

    So for the next few weeks, we’re going to look at the lives of 4 celebrities and see what we can learn from their stories. I think you’ll be surprised to learn that you have more in common with these folks than you thought (even if you don’t also have your own private jet).

    This week, we’re going to turn the spotlight on Michael Jackson. Even if you aren’t old enough to “Remember the Time” when Michael Jackson was dominating the charts, by the end of this article, you’ll see that he left holes in his estate plan that we can learn from.

    Before we get started, however, I want to address the elephant in the room: many people, maybe you’re included, find Michael Jackson’s personal life and choices… concerning. That is completely understandable. The intent of this piece is not to defend or promote him in any way. Rather, this article’s focus is on his family and what they’ve endured in the court system for the last 15 years.

    Now, let’s dive in and learn how you can avoid the same fate for your loved ones. 

    It’s As Easy as “ABC” (and 1, 2, 3)

    Before we take a look at the specifics of Michael Jackson’s story, let’s dispel a myth about estate planning: That it’s only for the rich or philanthropic. You do not need to be rich, philanthropic, or famous to need estate planning. You need estate planning if you own anything – even a bank account – and have people in your life you love. It’s as simple as that (dare I say it’s as simple as “ABC” and 1,2,3?). So as you think about your own estate planning, it’s time to “Beat It” past the misconceptions so you’re empowered to do the right thing by your loved ones. 

    So what happened in Michael Jackson’s case? He had an estate plan that included a Will, and the Will established trusts for his mother, Katherine, and his three children, Paris, Prince, and Bigi. 

    Let’s stop right there because there’s already an increased potential for conflict with this setup.

    When your assets pass via “Will” (instead of via Trust), your assets must go through a court process called probate, which, my mentor says, is a “lawsuit you file against yourself with your money for the benefit of your creditors.” Subjecting your assets and your family to probate can result in a long, time-consuming, and messy court process that can be unnecessarily expensive to resolve. Plus, the court process is entirely public, meaning anyone can access the records and see information about your assets and family that you would rather keep private. 

    A trust, on the other hand, bypasses the court process altogether, as long as your assets are owned in the name of the trust when you become incapacitated, or when you die. If your assets are properly transferred and retitled into the trust (this is called “funding” the trust), your estate can be administered privately and often takes less time than the court process does. A trust can be set up and funded while you’re alive, thereby avoiding probate, or it can be a part of your Will. When it’s part of your Will, like in MJ’s case, it isn’t established or funded until after the court process has played out. So if you’re trying to keep your family from going through the court process, putting a trust in your Will completely defeats the purpose.

    Here’s what we’ve learned so far: if your intent is to keep your loved ones out of court and conflict, creating a Will alone is a “Bad” choice. 

    Peace of Mind For the “Man in the Mirror” 

    Since Michael Jackson’s assets were not owned in a trust, and instead his assets needed to pass via Will, there have been ongoing legal matters in court, which still aren’t resolved 15 years (yes, you read that right) after his death. Currently, MJ’s family is embroiled in a dispute with the IRS, and so the trusts he intended to be created for his mother and children remain unfunded, and therefore, some of his assets cannot be transferred to them, in the way it seems he intended. It’s also highly probable that the legal disputes continue to cost the estate a lot of money. That’s money that would have gone to his mother and children otherwise. 

    To make sure the people you love receive your assets in the way you want, I cannot underscore the importance of education and intent. This is exactly why my Life & Legacy Planning process begins with educating you first. The first time we meet, I will show you exactly what will happen to your family and your assets after your death, based on your current plan (or the state’s plan for you, if you don’t have a plan). From there, I help you make intentional decisions about what’s right for you and your loved ones, based on your desires, your assets, your family dynamics, and your budget. 

    Taxes – A Potentially “Dangerous” Situation! 

    The Jackson estate’s ongoing battle with the IRS also serves as a stark reminder of the tax implications that can affect your plan and your loved ones. When it comes to taxes, you can’t think in terms of “Black or White” – there are many shades of gray to consider. If you intend to avoid as many taxes as possible, you don’t want to cut corners by either doing your estate planning cheaply or on your own. That could be “Dangerous!” I can help you create a comprehensive plan that minimizes taxes as much as possible, potentially saving you and your family (lots of) money. 

    Speaking of saving money, taxes can significantly reduce the value of what you pass on to your heirs, which has a direct impact on your loved ones. To minimize this impact, together you and I will explore different strategies such as gifting assets during your lifetime, establishing irrevocable trusts, or using life insurance policies to cover potential tax liabilities. 

    So our next lesson from Michael Jackson’s story is: when it comes to saving money on taxes, the stakes are too high to go at it alone. Work with a professional who can advise you properly. We aren’t clear why Michael Jackson didn’t get the kind of support necessary to minimize taxes and protect his estate from a long drawn-out court process, but what we do know for sure is that we can help you and your loved ones.

    Avoiding the “Thriller” of Legal Disputes

    The Jackson case also highlights the importance of choosing the right representatives for your estate. These are the people who handle your affairs after you’re gone (they’re called “executors” if there’s a Will or “trustees” if there’s a Trust). MJ’s family members have criticized the representatives for the way they’ve managed the estate. In particular, Katherine Jackson has alleged that the executors have been too frugal and are holding onto assets to maintain control. 

    There’s always a possibility of conflict between your representatives and your loved ones, even if you aren’t famous and don’t have millions of dollars to fight over. So to help minimize the potential, we recommend you communicate your intentions to your representatives and to your loved ones during your lifetime. Consider holding a meeting so everyone knows what your wishes are and understands the intent behind your decisions. You may not be able to “Heal the World” on your own, but you can promote healing within your own family and prevent future conflict by opening the lines of communication now. We often facilitate these meetings for our clients.

    Also, know that you don’t have to choose family members to be your representatives – even if you feel pressured to do so. If you aren’t sure who the “right people” are, think about people you know who are not only trustworthy but also capable of handling complex financial and legal matters. There’s also the option of choosing a professional representative, as Michael Jackson did, who might be more appropriate for your situation. When you work with us, we’ll be there to “Rock With You” through all the different scenarios that could arise, so you can then choose the right people for your unique circumstances. 

    Our two final lessons from Michael Jackson’s story are these: 1) Communicate your wishes openly to your representatives and your family, and 2) Choose the right people to act for you when you no longer can. 

    By learning from the challenges faced by Michael Jackson’s family, you can ward off the possibility of a similar outcome for your loved ones. Your careful planning today can pave the way for a smoother transition of your assets in the future, ensuring that you are able to support your family after you’re gone, rather than creating a mess for them to handle without you. I’m here to serve you and help you ensure your estate doesn’t become a “Thriller” of legal battles, but instead a harmonious transition that would make even the King of Pop proud.

    “You Are Not Alone” – We’re Here for You

    It’s “Human Nature ” to want to avoid thinking about your death, much less plan for it. We get it. But when we face our mortality, we’re able to live a more fulfilling life. The good news is that you don’t have to deal with it alone. We’re here to support you every step of the way. 

    As a Personal Family Lawyer Firm, we help you create a Life & Legacy Plan from a place of education and intention, so that your loved ones stay out of court and conflict. And once you’ve created your plan, you can rest easy knowing your wishes will be honored, your loved ones cared for, and your legacy preserved. 

    Click here to schedule a complimentary 15-minute consultation to learn more:

    Free 15-min Consult

    This article is a service of Jeannette Marsala, a Personal Family Lawyer® Firm. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Life & Legacy Planning Session™, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Life & Legacy Planning Session™.

  • Why “Just a Will” Is Never Enough

    Why “Just a Will” Is Never Enough

    When you think of estate planning, a will is usually the first thing that comes to mind. In fact, most people who contact me tell me they don’t need anything complicated for their estate- just a will. Indeed, wills have a reputation as the number one estate planning tool and can be seen all over TV shows and movies, from the dramatic “reading of the will” (which rarely happens in real life) to characters plotting how best to defraud their billionaire uncle’s will in order to inherit his lavish estate.

    But although wills are a key part of your estate plan – and a big part of the movies – relying on a will alone won’t solve your estate planning needs – no matter what Hollywood says. Instead, using just a will to plan your final wishes is likely to leave your loved ones with an expensive mess that won’t distribute your assets in the way you intended.  

    What’s more, a will alone won’t ensure that you’re taken care of in the event of incapacity, and contrary to what you might think, relying on only a will actually guarantees that your family will need to go to court when you die.

    If you don’t want to leave your family with a mess if something happens to you, it’s important to know how a will works and when it can be used to benefit you and your family. 

    What Exactly Is a Will and How Does it Work?

    A will is a written document that directs how the creator of the will wants their possessions disposed of after their death. The creator of the will is called the testator or testatrix. In your will you can name someone you trust to manage the distribution of your assets, called your personal representative or executor. You can also write out what you want to have happen to your property, what charitable gifts you want to make, and who will receive them.

    A will can be a complex document or a very simple document. You can even write your will on a napkin if you really want to!

    With that said, a will isn’t a legally binding document unless it’s executed according to the laws of the state where you reside. In general, you need to sign your will in front of a witness, and sometimes a notary. 

    Some states have laws that allow you to create a will that isn’t witnessed at all so long as it is handwritten by the testator themselves. But because every state has different laws for the creation of a will, it’s important to consult with an experienced estate planning attorney (like me) to create your will rather than trying to write your own.

    A Will Requires Probate Court

    One of the biggest estate planning myths I hear from clients is the belief that by having a will, their loved ones won’t need to go to court after they die.

    This is sadly the opposite of the truth.

    If you use only a will as your main method of estate planning, you are actually guaranteeing that your loved ones will go to court after you die because a will is required by law to go through the court system called probate before any of your assets can be distributed. In fact, a will is only effective within the probate court.

    Once your will is admitted to the court after your death, your personal representative or executor will be given official authority to move your assets under the court’s supervision. This ensures your property is distributed according to your wishes and that the court can intervene if there are any disputes over who gets what.

    While court oversight can be helpful if there is any confusion or disagreement about your estate, the probate process is long and expensive. For very small estates, the process may take about 6 months, but for most estates, the process can take 12 – 18 months or sometimes even more. 

    Due to the length and complexity of the process, going through probate can easily cost your family tens of thousands of dollars. Some states even require that probate cost a certain percentage of your estate’s value.

    In addition, because probate is a public court proceeding, your will becomes part of the public record upon your death, allowing everyone to see the contents of your estate, who your beneficiaries are, and what they’ll receive. Unfortunately, it’s not uncommon for scammers to use this information to try to take advantage of young or vulnerable beneficiaries who just inherited money from you.

    A Will Does Not Apply to All of Your Assets or All of Your Needs

    Although movies make it seem like you can and should leave all your property to your loved ones through your will, a will actually only covers certain items of your property, including any property owned solely in your name and any property that doesn’t have a beneficiary designation.

    A will doesn’t cover property co-owned by you with others listed as joint tenants or owned as marital property, meaning you can only give away your share of any property you own with others, not the entire property.

    Any assets that have a beneficiary designation, like retirement accounts or life insurance, aren’t controlled by your will at all but will instead be paid out to the person listed as your beneficiary on each account. Because of this, it’s especially important to make sure your account beneficiaries are up to date.

    In addition, a will has no power until you die, so you can’t use it to give someone you trust the power to make decisions for you if you’re incapacitated due to illness or injury. Even if you named someone in your will to manage your estate or watch over your children, that person will have no authority to do so while you’re alive. 

    Don’t Just Get a Will, Get an Estate Plan

    With all the issues that using a will for estate planning can create, you might be wondering why a will is even used at all. The thing is, a will isn’t the one-and-done solution that most people are led to believe by TV shows and even some lawyers.

    Instead, a will should be used as a piece of your overall estate plan, not as the entire plan itself.  And ideally, your will shouldn’t even need to be used at all. 

    How can that be? Well, an estate plan isn’t just one or two documents – it’s a range of tools and coordinated planning that makes sure everything and everyone you love is taken care of.

    And by using better tools like a trust instead of a will as your main tool for estate planning, you can direct what happens to your property while avoiding probate court entirely and ensuring the people you trust can step in and manage your assets immediately if you become incapacitated because of an illness or injury. 

    In addition, any assets you put in the name of your trust are entirely private, meaning the court and the public will never know what you own or who will inherit it after you’re gone. 

    When using a trust-based estate plan, you’ll still have a will, but your will should only need to serve as a backup and safety net to make sure that any assets that are accidentally left out of your trust at your death are added back into your trust.

    And, even more important than both a will and a trust, is an inventory of your assets so your family knows what you have, where it is, and how to find it when you become incapacitated or die. Without an inventory of your assets, your family will be literally lost when something happens to you. A comprehensive inventory updated throughout your lifetime is a critical, and often overlooked, piece of an estate plan that is not “just a will.”

    If you’re ready to see how having an estate plan for your family is different than having “just a will,” schedule your Family Wealth Planning Session today. During the session, we’ll review an inventory of everything you have and everyone you love, and together look at what would happen to your possessions and loved ones when something does happen. Then I’ll help you develop a plan to make sure your loved ones are taken care of when you can’t be there and that your plan works for you, and for them, exactly as you want it – at your budget and within your desires. 

    Most importantly, I don’t just create documents. I guide you and your family through every step of the process, now and at the time of your passing. I even help all of my clients pass on something more valuable than their money – their values, stories, and wisdom – through a Family Legacy Interview.

    To get clear on what you really do need for yourself and the people you love, call (650) 600-1735 so you can get on the road to your Family Wealth Planning Session today.

    This article is a service of Jeannette Marsala, Personal Family Lawyer. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session, during which you’ll get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

  • What happens if you die without a living trust?

    What happens if you die without a living trust?

    If you pass away without a living trust, your family members may have to go through a court process called “probate.”

    What is Probate?

    Probate is when the court supervises the processes that transfer legal title of property from the estate of the person who has died (the “decedent”) to his or her beneficiaries.

    Probate can be a stressful, time-consuming and costly process. After grieving, your family members will have to file a petition with the probate court. This petition appoints an executor who is responsible for gathering all your assets, paying your creditors, and distributing your assets to your heirs.

    The probate court oversees every step of the process, which can be time-consuming and confusing. Your executor has to post a bond with the court, file accountings with the probate court to ensure the assets are distributed correctly. If a house needs to be sold, the probate court needs to approve hiring of a realtor, the listing needs to be published in a newspaper and the court needs to approve the buyer’s offer. All of this may require a court hearing, which may be several months after filing the petition because the probate courts are overwhelmed.

    Your family will have to pay the court filing fees (which alone can cost more than preparing a living trust prepared by an attorney), pay for a bond, pay executor and attorneys fees which are based on the gross value of the estate (which can be tens of thousands of dollars).

    BTW, this is all public. Probate proceedings are a matter of public record, so everyone can read everything filed with the probate court. No privacy in probate court.

    Moreover, there is a “living probate” called a conservatorship for people who are unable to make financial decisions or care for themselves.

    Understandably, most people don’t want to go through probate. That’s why the #1 reason why people need an estate plan is to avoid probate.

    What if you have a will?

    How about a will? Why is a living trust better than a will?

    A will doesn’t avoid probate. A will is a document that specifies who shall receive your property when you pass away, and may include other provisions such as a guardianship nomination. But a probate court is still involved – all those expenses and processes described above still apply.

    A will allows you to…

    • Choose your executor
    • Name a guardian for your minor children
    • Choose who gets what and avoid intestacy laws
    • Waive the bond requirement

    Your family members still go through probate, even if you have a will. They still have to pay the filing fees, executor, and attorneys. The probate court still has to approve everything. It still takes a huge amount of time and money.

    Read more on how you can avoid probate.

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