I don’t want people to think that I’m obsessed with Michael Jackson.
However, I am very interested in proper estate planning, and I think that others should be too. The Michael Jackson case is useful because it can show “ordinary” people what to do and what not to do with regards to their own planning.
Many people do not know what a Revocable Living Trust is, or how they work. The purpose of a Revocable Living Trust (which I’ll refer to as an “RLT”) is to avoid probate when you die, and to avoid a Guardianship if you become incapacitated. That’s it. An RLT does not protect you from creditors. It does not save you taxes. It does not do many of the things that non-attorney Trust mills and hucksters claim that it does. But used correctly, and, if you need one, it can be a powerful tool that is an essential part of estate planning. In brief, a person will transfer ownership and title of their assets while they are alive to their RLT. Then, upon their death, and if the RLT was properly funded, the RLT will be the owner of the assets and not the individual. Because the Trust owned the property and not the individual, there is nothing to probate (again, if the RLT is properly funded).
In a series of posts, I will examine Michael Jackson’s Revocable Trust in depth. Feel free to download the trust document so you can follow along.
Article One of Michael Jackson’s RLT (which I will refer to as the Trust) sets forth some basic information about the Trust — i.e., it’s name, when it was established, that Michael Jackson has the power to amend or revoke it at any time, that Michael Jackson has the power to add or remove property from it at any time, and other general principles. Michael Jackson is the creator (often referred to as the “Settlor,” “Grantor,” or in this document, “Trustor“), and he is also the Trustee. That means that while he was alive and able to make his own decisions, he was the only person in control of the Trust.
Article Two of the Trust provides how the trust property will be managed during Michael Jackson’s lifetime. The Trustee (who is Michael Jackson) shall pay to the Trustor (who is also Michael Jackson) the net income of the Trust and the Principal of the Trust, as needed or on request. But, if Michael Jackson were to become incapacitated, then a successor Trustee would be appointed in his place to manage the property for his benefit.
The real meat of the Trust starts in Article Three though, which provides how Michael Jackson’s estate will be distributed upon his death.