Prince vs. Michael Jackson. Since I was a child growing up in the 80s, this has been the debate. Who is better? Who is more musically talented? Michael Jackson was known for his signature dance moves, amazing live performances, and blockbuster albums, including the greatest selling album of all time. Prince was renowned for his unparalleled ability to play a myriad of instruments and his prolific songwriting.
Both Prince and Michael Jackson were amazing talents and that is no debate. Sadly, these amazing talents have both succumbed to the same tragic end by eerily similar means: falling victim to the epidemic of prescription drug overdose. So, as in life, Prince and Michael Jackson will be compared in death. However, this article will not be a commentary on who is the better musician, nor about the problem of addiction, but a cautionary tale for poor estate planning.
As an artist, Prince usually had a band to back him up; however, many times he played all instruments on his own, and it seemed as if he were a one-man-show. This was also true in his financial life. Prince was notorious for being a very private man who did not trust many people, including his own family. Therefore, it comes as no surprise that when he passed away he did not have his posthumous life in order. After his death, it was announced the famed musician failed set up a will or a trust for his family or any charities. His family is now squabbling over his estate and proceedings will probably go on for a very long time as they try to settle his “one-man-band” of an estate plan. Even worse, this leaves the door open for countless others to come in and challenge the estate. By not having an estate plan in place, anyone has the opportunity to challenge your legacy. When you are as high profile as Prince, the number of people attracted to do so grows exponentially.
In contrast, Michael Jackson’s estate planning was actually quite thorough. Although many people believed Jackson to be a very isolated and eccentric person, both in and out of the public eye, he still had a team of professionals around him that helped manage his estate very well. Led by entertainment lawyer John Branca and music executive John McClain as trustees, Jackson’s estate was properly disbursed at his death in 2009. According to his trust, after all estate taxes, fess, and costs were paid, Jackson left 20% of his money to children’s charities, 50% to his mother, and the remaining 50% to be divided between his three minor children. The Jackson children trusts will be held separately until they reach the age of 21, whereby the estate becomes liquid to them. As of now, the trustees of the estate have full control of the assets, which is what Jackson had intended. This is where the beauty of the living trust lies: an individual maintains control of the assets from beyond the grave.
Even still, Jackson’s estate was not without its flaws. The IRS is actually contesting the value of Jackson’s estate for tax purposes, saying that there are enormous discrepancies, and hearings are scheduled in 2017. No estate plan is perfect, especially in high profile celebrity cases like this. Yet the stark contrast between how the two superstars chose to handle their assets—and the subsequent problems that can ensue—shows us that making sure you have a plan in place is the most important thing you can do to protect yourself, your loved ones, and your assets. Here is a quick checklist of some basic tips:
• Create a will - This is a very easy and very important way to have basic planning done. There are even will templates available for free online that can be notarized to become legal documents
• Get Life insurance - Assuming you’re not a celebrity with hundreds-of-millions of dollars to leave to your beneficiaries, having life insurance can help give your family financial security in case the worst should happen.
• Create a living trust - Although the living trust is more expensive than a will, it has many benefits that a will does not. It is a comprehensive document that can give you a multitude of ways to control your assets from beyond the grave. You can also include healthcare directives, choose guardians of children, and executors of the estate. Unlike a will, a living trust avoids probate court, making your finances a private matter to be disbursed as you see fit.
• Seek Financial Help - As we’ve learned, it’s clear that you should have smart financial people around you. This should include, at its core, a financial advisor, an attorney, and an accountant. Having the proper financial team around you will help you make the best financial decisions.
Everyone needs help with managing their finances, making sure their money works for them both in life and after. We are often reminded of this in the wake of major events, most recently Prince’s untimely passing. While some argue that his adversary Jackson could have benefited significantly from increased financial assistance during life--because of his eccentric and frivolous spending--the battle of proper estate planning goes to the King of Pop. The battle of who was a more talented artist, however, will be one that rages on for years to come, long after their estates have (hopefully) been settled.
By Ayal Shmilovich
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which course of action may be appropriate for you, consult your financial advisor. No strategy assures success or protects against loss.
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