Ivy's summary:
Summary of the Documents
- The estate is first established in 1995 to transfer the ownership of MJ's assets (at that time MJ's children weren't beneficiaries) - It shows us that the estate planning started quite early.
- During his lifetime Michael made changes to the trust as he wanted , added assets etc. During his lifetime Micheal also got income from the assets included in the trust.
- Trust was also set to provide for Michael if he became physically or mentally incapacitated any time.
- Charities (determined in IRS code as for educational purposes, encouragement of art, prevention of cruelty against children or animals) getting 20% and the charities who will be getting money is going to be determined by Branca, McClain and Katherine Jackson. In the document it is also said that MJ's intent by leaving money to charities is " to benefit children". So most probably the committee (Branca , McClain and Katherine) will choose children charities. Trust also allows the estate to form a children's charity and give the money to the charity they have established.
- After charity share is deducted estate is to pay federal/state/ inheritance taxes.
- The distribution states is like this : If MJ had children they get 50% and his mother gets 50%. If he didn't have any children all of his estate would have gone to his mother. If he didn't have children and his mother didn't survive, his 6 cousins would get the money.
- Debbie is left out , just as in the will.
- Katherine is provided for her lifetime from the net income (the principal is kept). After her death her share goes back to MJ's kids and his grandkids. If none are alive , his 6 cousins become the beneficiaries.
- Until they are 21 the children are also getting shares from the net income. When 21 they can apply for their benefit - meaning when they are 21 they can request to get their full share (in other words get the money from the estate and the executors). If they do such a request they get 1/3 of the principal when they are 30, 1/2 of the principal when they are 35 and remainder of it when they are 40.
- If they die before getting their shares, their money goes to their kids (MJ's grandkids). If they don't have kids their shares goes to their brothers and sister equally.
- If the estate doesn't have enough net income to cover the living expenses of the beneficiaries, they can provide money to the beneficiaries from/through the principal.
- It also says that they can request and get additional money if they want to buy a house, for their education, marriage and start a business etc regardless of their age. (The executors duty is to make sure that the business they want to start is reasonably sound. After that the kids are not kept responsible if the business fails).
- Interesting tidbit: If none of the beneficiaries survive (KJ, MJ's kids and MJ's grandkids and his cousins and his cousins kids) -not really likely to happen - the estate goes to Michael's heirs by law. Meaning any living family member by order.
- Interesting provision : In the case of minor children executors can give money for the care of this children directly to them (and not to the guardian) if they choose. Also if the executors are giving the money to the guardian of the children they can request documents showing how the money is spent.
- Trust provisions are set to follow the laws.
- Simply put executors get the power to manage the estate - quite common. No special powers.
- and bombshell - if no executors remain to look after the estate (and they don't determine the next group of executors), NATIONSBANK - in other words BANK OF AMERICA is named as the executor of the estate.
- If a Bank is the executor of the estate, his children when they are adults (18) could change the bank that's the executor.
- About the fees of the executors it says "executors can pay themselves reasonable compensation without court order".
- Executors can also give accounting of what they do to the beneficiaries. And beneficiaries have the right to disagree with this accounting (earnings, spendings).
What we have learned with my 2 cents
- This is a really good trust document. It's really planned for the future.
- It's obvious that Michael did not want his family as executors. To me this is quite apparent by the naming of Bank of America as the alternative executor.
- The children can get the full money / full shares. All other things said were speculation.
- Giving money in a partial format when they are 30/35/40 is very well thought. It ensures that the children will not have money issues/ go bankrupt. (we know several famous heirs that are penniless).
- Even though children only get shares from net income until they are 30, they can get additional money for expenses such as education, getting a house, marrying and opening their business. Michael thought about his children very well.
- Also if required giving minor children's money directly also very good as well as giving executors the option to ask how the money spent is good too. Guardian (whoever they might be in the present or future) cannot spend money for other things than MJ's kids.
- I hope the talk about executor's fees stops now - by the trust documents they could have determined their fees on their own but they went to a judge.
- Also this document shows what I have been saying all along, executors do not have unlimited power, they can't do whatever they want. If requested (currently by Katherine and the children's lawyer and later by children when they turn 18) executors are to give the accounting of the business deals, money earned and spent to the beneficiaries. The beneficiaries (MJ's kids and his mother) is protected against fraud and intentional wrongdoing by the executors.
