2009-07-01 02:09:03 -

GLENDALE, CA -- (Marketwire) -- 06/30/09 -- The expected long and costly battle over the Michael Jackson estate could have been avoided had the pop star filed a living trust for his family, a leading estate planning attorney said today.



And depending on the amounts of Jackson's assets and debts, there is a strong possibility that the star's three children might get nothing, said attorney William G. Wais. At the time of this press release, no evidence has surfaced regarding Michael Jackson having a living trust.



"A will does not go far enough to protect your family. Without a living trust, the estate is now subject to a very costly probate exercise," Wais said. "If any attorney representing the Jackson family looked relaxed and serene while speaking to the media, he was probably thinking about the probate fees he or she stands to make while probating the Michael Jackson estate."



News media reports estimate Michael Jackson's estate at between $500 million and $2 billion. Reports also suggest Jackson may have had debts of up to $500 million.



"If we assume that Jackson's assets are two billion dollars, the total probate fees could reach 10 million dollars," Wais said. "Of that amount, the attorney would receive half, or five million, and the proposed administrator, who we assume is Michael's mother Katherine Jackson, would receive the other half."



If Jackson's assets turned out to be worth $500 million and his debt was $490 million, much of the estate could be eaten up by probate fees, Wais said.



Probate fees are calculated on the "gross" assets, not the "net" assets, Wais said. As such, all of the Jackson assets will be assessed probate fees. Liabilities are not included in the calculation. For example, in a more normal estate, a $1 million home would be assessed $46,000 in probate fees, even if there is a $900,000 mortgage, Wais said.



A living trust also can help protect an estate in two other key areas: Tax liabilities and the age when children receive proceeds, Wais said.



The first $3.5 million of Michael Jackson's estate will be free of Federal Estate Taxes. The remainder of the estate will be taxed at approximately 45%. Assuming estimates of a $1 billion estate are true, that would represent approximately $450 million in taxes.



"Mr. Jackson could have left some of that money to charity and eliminated the taxes on the charitable gift portion of his estate," Wais said. "Both Bill Gates and Warren Buffett have adopted this strategy. They leave their children enough to live on, and give the rest to charity."



Mr. Jackson's children would receive everything after probate and taxes.
Because Michael Jackson's children become adults at age 18, they are entitled to their probate share at an early age. However, under a living trust, a parent would normally stipulate a delay in the full distribution of the assets until age 25 or older.



About William "Bill" Wais


Bill Wais has been a full-time estate planning attorney in Glendale since 1994 and is a frequent speaker on the subject of estate plans. Mr. Wais graduated with honors from UCLA and received his Juris Doctor degree from Loyola Law School (Los Angeles). Ninety five (95%) percent of his law practice involves estate planning, living trusts and probate. He does set up the occasional corporation for a client. Each year, he sets up more than 100 living trusts for his clients. For more information, visit:
www.billwais.com : .

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Denis Wolcott
The Wolcott Company
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