For the Halloween episode of Motley Fool Answers, Alison Southwick and Robert Brokamp engage in a spirited discussion of the horrors some folks have visited upon their families' finances from the afterlife, by making big mistakes in estate planning.
In this segment, they look back at the incomplete estate planning efforts of the King of Pop, Michael Jackson, who did have a will. He also created trusts for his heirs so that he could pass assets down to them in a way that bypassed the lengthy probate process. But there's a twist.
A full transcript follows the video.
This video was recorded on Oct. 31, 2017.
Alison Southwick: Darkness falls across the land. The midnight hour is close at hand. Creatures crawl in search of massive residuals and royalties. Oh, yes, it's Thriller.
Robert Brokamp: Yes, Michael Jackson, another tragic death. A great musician. Died too young. A lot can be said about Michael Jackson's finances in general, as well as his estate planning. We'll just focus on one thing here. He actually did some decent estate planning. He did have a will and he did set up trusts, and trusts have all kinds of benefits, one of them being that the assets will then pass to the heirs and bypass probate, which can be a long and legal drawn-out process of passing assets on.
The problem was he created the trusts, but he didn't fund them. It's sort of like opening an account but not putting in any money. Because they weren't funded, all the assets had to go through probate before they could get to the trust. It's still ongoing even though he died in 2009. He had young kids at the time, and when you have assets tied up in the probate process, they may or may not be able to access some of those assets to pay for living expenses. It's a very long, complicated story. Even recently there have been some more issues about how his estate is being handled, so there's a lot with that.
But the No. 1 lesson with Michael Jackson is going to a lawyer and getting an estate plan is a great step. An important first step. But then you've got to follow through on whatever you've decided to do with the estate plan.
Interesting fact about Michael Jackson. In 2016 he was the highest-paid dead celebrity, according to Forbes.
Brokamp: Do you want to take a guess how much money his estate made?
Southwick: Does his estate still own the Beatles catalog?
Brokamp: Yes, and I think it was a deal with Sony. He was top paid in 2015, but in 2016 it skyrocketed. It was $825 million...
Brokamp: ...one year. Do you want to take a guess at any of the top 10? Rick?
Brokamp: Elvis, No. 4. Any other guesses?
Southwick: We'll say some Beatles. John Lennon?
Brokamp: John Lennon. No. 2 is Charles Schulz.
Southwick: Oh, Peanuts!
Brokamp: Yes. Three, Arnold Palmer. Four, Elvis. Five, Prince. Six, Bob Marley. Still pulling in $21 million a year.
Southwick: It's like a legal requirement that you have to buy Legend your junior year of high school. Like everyone goes through that Bob Marley phase.
Brokamp: Seven, Dr. Seuss. Nine, Albert Einstein. Still bringing in $11.5 million a year. Ten, Bettie Page.
Brokamp: 1950s pinup.
Alison Southwick has no position in any of the stocks mentioned. Robert Brokamp, CFP has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.