Understanding MJ Estate & Correcting Misconceptions

ivy

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Over time some events and statements coming from the fans made us realize that not everyone understands MJ Estate, will and probate, trusts and this results in some common misconceptions. In this thread we will try to provide some brief information about stuff and correct some misconceptions.

I tried to answer most common questions. Please post any questions you might have.

Michael Jackson Estate is under probate.

Probate in layman's terms is the process of first paying the debts of the deceased and then distributing the assets to the beneficiaries.

MJ Estate is still working on paying the debts and believes they request at least one more year.

Q- Why are the beneficiaries being paid an allowance?

Because the law requires first the debts to be paid. Beneficiaries can only get the assets after the debts are satisfied

Q - How is the allowance is determined?

It's determined by a court on a need basis.

Q- What is court's role on this probate?

A judge is overseeing this process. Estate is reporting their accounting to the court and some decisions require court approval as well.

Can Katherine get information about what Estate is doing?

Absolutely. Estate is required to give her notice and basic information. She can also ask for detailed information - just as her lawyer currently have an ongoing motion to examine the accounting of MJ Estate.

Q - How much money did MJ Estate earned?

Per Estate Accounting filed with the court , they generated $475 Million in gross earnings as of July 2012.

Q - Didn't Billboard reported a $1 Billion number? What was that?

That was an estimation done by Billboard based on long term value of the deals and full prices. For example Billboard calculated CD sales by using an average CD price ($10 -$12) while actually Michael's share is significantly lower. That was a long term estimation of current deals in place.

Q- If MJ Estate earned $475 Million why didn't they pay all the debts?

Because $475 M is in gross earnings not profit. Estate still has to pay their expenses, salaries, beneficiary allowances, legal fees, taxes etc. So the net income is significantly lower.

Q - How much debt MJ Estate paid?

Significant amounts. They have reported that they expected to pay personal loans by the end of 2012. So most of creditor claims has been resolved (up to $30M), debt to AEG has been paid (around $30 M) and loan on Mijac (around $70 M) is to be paid by December 2012. It seems like the only debt remaining would be loan on Sony / ATV.

Q- Why hasn't MJ Estate given any money to charity as Michael's will requires?

As mentioned as probate rules, first the debt has to be paid and only after that MJ Estate can give money to the beneficiaries including the charities. Some people have been unfairly criticizing MJ Estate without understanding the basic legal rule. I also have to note that Estate also asked the judge to allow them to set aside $30 Million for the beneficiaries - which includes charities.

Q - Why is the probate taking this long? Is this normal?

Yes it's normal. The bigger and the more complex the business affairs the longer it takes. An extreme example would be Marilyn Monroe Estate which was under probate over 30 years - due to never ending disputes.

Q- What happens after the probate is over?

Michael's will asks the assets to be transferred into two trusts. One for Katherine and one for his kids.

Q- How much money would Katherine and MJ's kids will get after the probate?

Trustees (Branca and McClain) would continue to manage the trusts.

Katherine is supposed to get whatever is necessary for her care. There's no set amount for her. It's totally determined by the trustees/ executors. Katherine will not be getting any lump sum payment or ownership of any assets.

Michael's kids is supposed to get an allowance until they are 21 years old. Trust allows them to be given money for buying a house, starting a family & business , going to school etc even they are younger than 21. When they are 21 they start getting the income, starting 30 they are starting to get the principal assets. When they are 40 , they will get the full control of the assets.

Q - Is this normal?

Yes it is. In the case of highly valuable and high income Estates, it's common practice to divide up the distribution and give the control to the children at a later age. It's all to protect the children from being taken advantage of and giving them the control at a mature age. For example Lisa Marie Presley got control over her fathers Estate when she was 35 years old.

Q- Who owns Neverland?

Michael Jackson Estate with Colony Capital. MJ Estate owns 87.5% undivided interest at Neverland.

Q- What does undivided 87.5% interest mean?

It means although MJ Estate has a higher share and Colony Capital have the minor share, they have same use rights. In other words even though Colony Capital only owns 12.5% of Neverland, they can use the 100% of the property. It also means that all the decisions has to be done collectively.

Q- I'm hearing "Save the Neverland" or "Buy Back Neverland", what are those?

Those are either a huge misconception or a scam. As I said Estate owns 87.5% undivided interest in Neverland. Neverland is also being taken care of and in real good shape. It doesn't require any saving.

Fans trying to buy Neverland is impossible. First well because it's not for sale and second Colony Capital cannot sell their share without the approval of MJ Estate. So it won't happen, unless both Colony Capital and MJ Estate decide to sell it and a judge approves it. Just don't give anyone any money to buy or save Neverland.
 
Who is making creative decisions what songs to release - Estate or Sony?
 
Who is making creative decisions what songs to release - Estate or Sony?

Impossible to answer as Estate - Sony contract hasn't been public. However logically I would expect a joint decision making as it doesn't make sense that either party would leave the total control to the other.
 
Why is the probate over when the biggest loan against Sony/Atv 280millions is unpaid? shouldn't the estate pay off all debts first before distributing money to the beneficiaries?
 
Why is the probate over when the biggest loan against Sony/Atv 280millions is unpaid? shouldn't the estate pay off all debts first before distributing money to the beneficiaries?

probate isn't over. in the second accounting they asked for at least one more year. they might ask for more time when they filed the third accounting. I just posted what would happen when the probate is over.

I also have to add that I don't know what would happen if they refinance the loan and pay off the existing note. It might have allow them to satisfy the probate process or it might not. We need a more experienced person for that question.
 
So the kids get an allowance till 21 but they can ask for more money if they need it for school or business? When they are 40 they get full control of the estate and Prince will reach that first? I was reading about Whitney's daughter and she gets $20 million and gets divided at different parts when she reaches certain ages. Is it different between the 2 estates? Also when Katherine passes away her part goes back to his kids?

Thanks for explaining. It does get confusing.
 
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So the kids get an allowance till 21 but they can ask for more money if they need it for school or business?

exactly. The trust says to pay living expenses for the kids until they are 21 which is equivalent of an allowance (determined by the Executors). However the trust also says that kids can get money from the Estate for buying a house, getting an education, getting married, starting a business etc. So it allows for more money to be given to them for life events. So for example when 18 Prince says I want to start my own production company and I need $30 Million dollars, MJ Estate can give that money to him - as long as they think it's a sound business decision.

When they are 40 they get full control of the estate and Prince will reach that first?

When all of them are 40 they will have the full control. However starting when Prince turns 30 they would be getting partial control. Of course it's technically possible for them to be given an official or unofficial position after they turn 18.

I was reading about Whitney's daughter and she gets $20 million and gets divided at different parts when she reaches certain ages. Is it different between the 2 estates?

The idea is the same. Bobbi Kristina will receive 10 percent of her inheritance when she turns 21, 20 percent at age 25 and the balance on her 30th birthday. In Michael's trust the ages are income at 21, and principal in portions at 30, 35 and 40.

Also when Katherine passes away her part goes back to his kids?

Yes. I'll give a really simplified example : Imagine that when the probate is over MJ Estate has $100 Million , that would have made 40% $40 Million. This would have been put into a trust in Katherine's name and whatever is necessary would be used for her well being and care. Imagine that at the time of her death $10 Million was spent for Katherine and $30 Million was still remaining in her trust. That $30 Million then would be moved to MJ's kids trusts.

In other words Michael's will takes care of Katherine when she's alive but it's actually leaving everything to his kids.
 
Thank you. I am understanding it a lot better. I think Michael did a good job in how he outlined it all in his will.
 
Although I briefly covered this topic before , I will provide detailed information as some people are circulating

"PER TRUST: Clarified: Kids will NOT get any payout until Age 30 (1/3); 35 (1/2 of Remaining) & 40 (Remainder)!"

This is wrong.

The trust document says

"The net income of each share .. shall be paid or used for the benefit of the child ... under the discretion of Trustee until such child attains 21 year of age"

This means that until the kids 21 the trustees (Branca / McClain) give whatever they think needed or necessary for the children - kinda like an allowance.

Trust document continues

"Thereafter , the Trustee shall pay to or apply for his/her benefit the net income of his/her share ..."

This means that after the kids are 21 they are getting the net income.

It continues

"Upon each child's 30th birthday .. shall be distributed 1/3 of the principal of his share ... 35th birthday 1/2 .. 40th birthday the remaining"

This shows that they are getting the principal starting when they turn 30.

It also says

".. shall be in need of funds to purchase a home, start a family, .. engage in business Trustee may accelerate the distribution ... in his sole and absolute discretion"

So it's absolutely wrong that the MJ's kids will not get a payout until they are 30. They will start getting the income at 21. Furthermore the last provision about home, family, business does allow the Estate to speed up the distribution.
 
if colony paid around 25 mill for only a 12% share of the ranch does that mean the ranch is worth say upwards of 80 mill or whatever the exact maths are interms of its resale value?? seems alot to pay for a small % or does it not work like that
 
if colony paid around 25 mill for only a 12% share of the ranch does that mean the ranch is worth say upwards of 80 mill or whatever the exact maths are interms of its resale value?? seems alot to pay for a small % or does it not work like that

No it's not about the home value - at least not exactly. Colony Capital paid the $23 Million mortgage on Neverland that Michael was about to default. We don't see the details of the agreement between them but Estate called it highly unfair to Michael at Tohme lawsuit. We also know that it's undivided and even though Colony Capital has 12.5% , they do have equal power and full use of the property.

In 2012 for tax purposes Neverland was valued $29.2 Million by Santa Barbara County. Of course the actual value is generally higher - on the average of 30% which would bring it around $40 Million in real value. Also you need to add the symbolic value, meaning that as it's not just any regular house, if sold Neverland could be sold higher than it's real value. I did read that Colony Capital in 2008 estimated that it could fetch up to $100 million.
 
Thanks. so if the ranch was sold would colony get 12% of whatever it was sold for. would u say its seen as a bad deal for mj cause even though colony only own 12%

they have equal say and usuage
 
When Katherine dies, does her trust go to the kids trust or to whoever she decides?
 
Thanks. so if the ranch was sold would colony get 12% of whatever it was sold for. would u say its seen as a bad deal for mj cause even though colony only own 12% they have equal say and usuage

Yes that's at least one of the reasons why it's not a good agreement for Michael. As for whatever they are being paid I would think that there are still an agreement in place with them and MJ Estate. It has been reported that Estate could get the share by paying the money Colony Capital paid (25 Million) + interest (10-14%) + maintenance & care costs.

So as I don't think the $25 Million they gave had anything to do with the value of Neverland, what they will get paid wouldn't have anything to do with the value of it.

When Katherine dies, does her trust go to the kids trust or to whoever she decides?

It goes to the kids. It's written in Michael's trust. Katherine cannot leave her share to anyone.

That's perhaps the reason of the some attempts that is trying to get as much as money from the Estate while Katherine is alive or trying to get control of the Estate and/or Executor position.
 
this is for dummies.

until MJ kids are 21 (all of them?) they will get the money they need or the estate is willing go give them
if all kids are 21 they will get how much?
when all kids are 30 they will get 33% of the 40%?
when all kids are 35 they will get 66% of the 40%?
when all kids are 40 they will get 100% of the 40%?

an example
the mj estate make 100 million every year (net income. all taxes, employes are paid)

until MJ kids are 21 (all of them?) they will get they money they need or the estate is willing go give them
if all kids are 21 they will get how much?
when all kids are 30, each kid will get 4,44 million every year
when all kids are 35, each kid will get 8,88 million every year
when all kids are 40, each kid will get 13,33 million every year
Katherine is getting 40 million every year
20 millions goes to charity every year


correct?
 
until MJ kids are 21 (all of them?) they will get the money they need or the estate is willing go give them

all of them do not need to be 21. whenever each of them turn 21 they start getting their share from the income. for example when prince turns 21 he starts to get his share from the income while blanket continues to be on an allowance.

let me edit your example. Imagine MJ Estate makes $30 million net income a year (after all taxes, employees etc. paid). They also have principal assets worth $300 M (such as the catalogs, houses etc).

until MJ kids are 21 they will get they money they need or the estate is willing go give them

yes

if all kids are 21 they will get how much?

charity payment is for one time on the gross value of the Estate. Assuming that the charity condition is satisfied then the kids share would be $15 M if Katherine is alive and $30 M if she's dead.

So they would be getting either $5 M ( if Katherine is alive) or $10 M each.

when all kids are 30,
when all kids are 35,
when all kids are 40,

here you need to look to the principal assets, not only the income. Now they are starting to get control of the assets. So if for example the principal assets are worth $300 Million. They would be getting $33 M worth assets at 30,35 and 40. Of course the principal payment might not be monetary. For exaple in case of MIJAC catalog they would probably give them shares - 11% of it.


Katherine is getting 40 million every year

Katherine is not supposed to get any lump sum. She's only supposed to get whatever it's needed for her care.

20 millions goes to charity every year

I believe the charity donation is done once as the 20% of the gross value of the Estate. Someone can correct me if I'm mistaken.
 
If the principal assets was for example $300 milllion they would get $33 million each or all together? What is principal assets?
 
they would get 100 mill each given at three different ages. ie 33 at 30 years of age 35 and 40. that adds upto 300 mill
 
all of them do not need to be 21. whenever each of them turn 21 they start getting their share from the income. for example when prince turns 21 he starts to get his share from the income while blanket continues to be on an allowance.

let me edit your example. Imagine MJ Estate makes $30 million net income a year (after all taxes, employees etc. paid). They also have principal assets worth $300 M (such as the catalogs, houses etc).



yes



charity payment is for one time on the gross value of the Estate. Assuming that the charity condition is satisfied then the kids share would be $15 M if Katherine is alive and $30 M if she's dead.

So they would be getting either $5 M ( if Katherine is alive) or $10 M each.



here you need to look to the principal assets, not only the income. Now they are starting to get control of the assets. So if for example the principal assets are worth $300 Million. They would be getting $33 M worth assets at 30,35 and 40. Of course the principal payment might not be monetary. For exaple in case of MIJAC catalog they would probably give them shares - 11% of it.




Katherine is not supposed to get any lump sum. She's only supposed to get whatever it's needed for her care.



I believe the charity donation is done once as the 20% of the gross value of the Estate. Someone can correct me if I'm mistaken.


thats more complicated as i thought.
when they 21 they dont get a monthly "income"?
they only get ony single payment at 30, 35 and 40?
so only three payments?
 
What is principal assets?

anything that Michael owns and brings money - such as catalogs

thats more complicated as i thought.
when they 21 they dont get a monthly "income"?
they only get ony single payment at 30, 35 and 40?
so only three payments?

when they are 21 they would get at least one yearly payment of their share of income.

I will recommend not focusing on calculating the payments or how they'll work but look to the basics.

so simply put allowance until they are 21, their share of income after 21, control of the main principal assets starting 30, full control by 40. It's also possible to give them more money and speed up the distribution for the reasons of starting a family, buying a house, education and going to business.
 
ivy said:
Katherine is not supposed to get any lump sum. She's only supposed to get whatever it's needed for her care.

That vanity fair article by randall sullivan, seemed at one point to understand that the trust sets up an allowance which is funded from 40% of the estate, but then seems to subscribe to the view that mrs jj is expecting to receive everything that is currently in that fund, $30m. He even wrote that the siblings are getting edgy that she won't get it before she dies and are wanting the transfer to happen quickly so they can inherit all that money once she goes.

There seems to be a massive difference of opinion between what most of us would regard a reasonalbe allowance for an elderly lady to live on, and what mrs j and her lawyer regards as her rightful inheritance, something approaching 40% of estate income. It must be a real headache for the estate, to keep the peace with mrs j who is of course guardian of ppb and influences them, and to carry out what mj actually did intend with his will.
 
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^^

I think that belief also happens due to the fact that the trust document says that Katherine can be given whatever the Trustees determines is necessary for her care.

so now imagine this scenario. Imagine that there's $30 Million in Katherine's trust. The executors can say "you need this much for housing, this much for food etc. and it all totals to a $1 Million" - in other words just cover the exact expenses not leaving any more money for anyone. Or they can say "We believe you need the whole $30 Million that's in the trust".

So as you can see, if the Jacksons want the money, it's not a surprise to see that they want the full amount to be given to Katherine and/or want to replace the Executors and even put themselves in that position to make it happen.
 
Another gross misrepresentation is that MJ Estate did not allow Katherine to release her book "Never Can Say Goodbye".

Anyone can release any book they want. There's no need for permission or authorization. It could be a positive or a negative book. This explains why there had been books by Ian Halperin (negative about Michael) and how Latoya Jackson and Randall Sullivan was able to release books that wasn't necessarily positive about the Estate. That's also why many other people including Jermaine Jackson released a book. In other words Katherine can release any book she wants.

The only control Estate has over any book or video is the copyright and trademarks. For example they might not allow the use of pictures of Michael that they own the copyright, they might not allow the use of Michael's music in any documentary. That's their only control.

The only reason that MJ Estate was put in a position against Katherine and seemed like they were against her book was due to the involvement of Henry Vaccaro, Howard Mann and Brett Livingstone-Strong. Katherine's book included pictures that has been the subject of multiple legal events between Michael and Vaccaro, and 5 drawings of Michael that Estate had filed a copyright claim.

So a possible copyright infringement by Katherine's partners made that book problematic. Today we also know that based on a court's ruling there was indeed a copyright infringement going on. So Estate's complaints was justified.

Ownership of the drawings is still in contest and can be determined through the lawsuit against Tohme Tohme.
 
thank you very much for this thread, the financial situation is a lot more easier to understand now!
 
Is it possible to make this thread sticky?
People would always find it easily and post questions anytime there is something estate relating issues.
 
Thanks for this very informative thread.
 
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anything that Michael owns and brings money - such as catalogs



when they are 21 they would get at least one yearly payment of their share of income.


I will recommend not focusing on calculating the payments or how they'll work but look to the basics.

so simply put allowance until they are 21, their share of income after 21, control of the main principal assets starting 30, full control by 40. It's also possible to give them more money and speed up the distribution for the reasons of starting a family, buying a house, education and going to business.

but how much is that? %?

wasnt it said that they get 40%, katherine 40% and charity 20%?

and you said only one payment to charity?...

"I believe the charity donation is done once as the 20% of the gross value of the Estate. Someone can correct me if I'm mistaken."

only one time? not yearly or every month?
 
but how much is that? %?

wasnt it said that they get 40%, katherine 40% and charity 20%?

and you said only one payment to charity?...

"I believe the charity donation is done once as the 20% of the gross value of the Estate. Someone can correct me if I'm mistaken."

only one time? not yearly or every month?

honestly I wouldn't worry this much about the specifics and the exact percentages because those percentages would change if Katherine is alive or dead and if the charity payment is one time or each time. So it's impossible to answer and give you a certain percentage. All that matters is that they'll be getting their share of the income starting when they turn 21.

I said the charity payment is one time because the trust says " as soon as reasonably practical .. distribute a sum equal to 20% of Trustors gross Estate" , then it continues to say after that pay the taxes and after that it says "50% of the remaining balance set aside for Trustor's children" and "50% set aside for Katherine Jackson". It sounds like it's a one time major payment.
 
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