Understanding MJ Estate & Correcting Misconceptions

[passy001]

So if the estate has $100m cash and is worth $1b

by applying the rules

charities get 20% of $1b = $200m.
but since the estate has only $100m cash, how are they going to pay out the charities.
and now if they use all the money to pay out the charities, they will still owe them $100m. Plus, there won't be anything left for taxes, as well as the Katherine trust or the kids trust.

I wonder how the executors are going to work this out.

 

[mjchris]

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.

now i'm more confused then before i saw this thread. and it seems you also really dont know how this all works.
in the will it was said kids 40%, katherine 40% and charity 20%. right? but now after what u have told here in this thread, i dont know anything plausible. you cant even say if its a monthly payment, a yearly or one time. and how much. its totally confusing now. sorry to say that.

 

[ivy]

now i'm more confused then before i saw this thread. and it seems you also really dont know how this all works.
in the will it was said kids 40%, katherine 40% and charity 20%. right? but now after what u have told here in this thread, i dont know anything plausible. you cant even say if its a monthly payment, a yearly or one time. and how much. its totally confusing now. sorry to say that.

well to be honest you made it a lot more confusing than it should be.

No will doesn't say 40-40-20. That's what the media reported. The will says make a 20% payment on the gross value of the Estate, pay the Estate taxes, and then divide the rest 50-50 between the kids and his mother. Mathematically it makes that charity gets 20% and the kids and Katherine gets 40% of the total.

There are a lot of unknowns in regard to when and how the charity payment is made: well because we don't know the gross value of the Estate. How much the existing assets worh (most of them aren't valued yet and just listed as $1 value), Will they calculate the catalogs that worth billions, will they have the ability to do the charity payment in one single payment or will they be required to divide the payments into multiple payments over the years? We don't know these, only time will show us. We will learn in the future accounting about these numbers. So without these numbers it's impossible to do the calculations that you ask and give you a certain percentage. So again you are confusing yourself by focusing on a detail that cannot be known by the info we have today.

you cant even say if its a monthly payment, a yearly or one time. and how much.

trust document says "in convenient installments, at least annually". so that means that they will get paid at least once every year. This can also show you that you are making this a lot more confusing than it should be. No one can tell you the specifics you are asking. Executors might make anything ranging from daily payments to one single payment per year. Unless we are in Branca's brain or have a magic ball that can show the future no one can give you the certain answers you are looking for, well because it's not as specifically written as you have wanted and there's at least 6 years to the first income payment to Prince. We will all have to wait and see for the answers of the certain questions.

it seems you also really dont know how this all works.

I know how it works- at least the basics. As I said above you are asking for what will happen 6 years down the road with the limited information about gross Estate value, charity amount, whether it would be paid in once or whether it will require a payment plan and whether Katherine will be still alive or not. It's simply impossible to answer your painstakingly specific question with the current and publicly available information. Ask me 6 years later, I'm pretty sure that I could do a nice estimation then. But I can't see the future, I'm only human.

Seriously it's not that hard to understand that they'll be getting their share of the income starting when they turn 21. How much that will be will be calculated according to that years accounting and payment schedule will be determined by the Executors but it'll be at least once a year.

It's also important to note that I only mentioned this topic to correct the misconception that the kids will not get anything until they are 30. They will get income starting 21. That's all I care. I never claimed or promised that I would show an exact payment schedule for the future. That's impossible in my book.

 

[elusive moonwalker]

Thanks ivy.much appreciated

 

[twinklEE]

Thx Ivy

 

[Member Service]

I suggest everyone stay on topic of the scope of this discussion. Please do Not deraill this important thread into Jackson bashing or discussions of the children on twitter. It's getting old. Its seems the same people in every thread want to go down the same road. There are plenty of theads already for you to discuss those things. Do not do it in this thread. This thread is being sent throughout the fan base and beyond and we mean to keep it respectful, credible and on track. Please keep your comments, discussions on point and ask questions relevant to the Estate. Thread cleaned

 

[qbee]

So if the estate has $100m cash and is worth $1b

by applying the rules

charities get 20% of $1b = $200m.
but since the estate has only $100m cash, how are they going to pay out the charities.
and now if they use all the money to pay out the charities, they will still owe them $100m. Plus, there won't be anything left for taxes, as well as the Katherine trust or the kids trust.

I wonder how the executors are going to work this out.

Im not sure myself if the Estate pays to the charity fund what they are worth through their total assests. (Worth) I would think it would be calculated on income. Maybe Ivy can clarify how that works.

 

[mjchris]

well to be honest you made it a lot more confusing than it should be.

No will doesn't say 40-40-20. That's what the media reported. The will says make a 20% payment on the gross value of the Estate, pay the Estate taxes, and then divide the rest 50-50 between the kids and his mother. Mathematically it makes that charity gets 20% and the kids and Katherine gets 40% of the total.

There are a lot of unknowns in regard to when and how the charity payment is made: well because we don't know the gross value of the Estate. How much the existing assets worh (most of them aren't valued yet and just listed as $1 value), Will they calculate the catalogs that worth billions, will they have the ability to do the charity payment in one single payment or will they be required to divide the payments into multiple payments over the years? We don't know these, only time will show us. We will learn in the future accounting about these numbers. So without these numbers it's impossible to do the calculations that you ask and give you a certain percentage. So again you are confusing yourself by focusing on a detail that cannot be known by the info we have today.



trust document says "in convenient installments, at least annually". so that means that they will get paid at least once every year. This can also show you that you are making this a lot more confusing than it should be. No one can tell you the specifics you are asking. Executors might make anything ranging from daily payments to one single payment per year. Unless we are in Branca's brain or have a magic ball that can show the future no one can give you the certain answers you are looking for, well because it's not as specifically written as you have wanted and there's at least 6 years to the first income payment to Prince. We will all have to wait and see for the answers of the certain questions.



I know how it works- at least the basics. As I said above you are asking for what will happen 6 years down the road with the limited information about gross Estate value, charity amount, whether it would be paid in once or whether it will require a payment plan and whether Katherine will be still alive or not. It's simply impossible to answer your painstakingly specific question with the current and publicly available information. Ask me 6 years later, I'm pretty sure that I could do a nice estimation then. But I can't see the future, I'm only human.

Seriously it's not that hard to understand that they'll be getting their share of the income starting when they turn 21. How much that will be will be calculated according to that years accounting and payment schedule will be determined by the Executors but it'll be at least once a year.

It's also important to note that I only mentioned this topic to correct the misconception that the kids will not get anything until they are 30. They will get income starting 21. That's all I care. I never claimed or promised that I would show an exact payment schedule for the future. That's impossible in my book.

thanks for that. so there are a few answers in it.

but i would like to make just an example.
prince is 40, katherine is still alive. the estate gross value is 100 million dollars. the payment is every year.
the will says 20% of the gross value for the kids, katherine, and charity.
thats 20 million dollars. then pay the taxes,... i say 5 million dollars for this... thats 15 million.
the kids would get 6 million (40%, 2 million for each) and katherine also 6 million (40%), and 4 millon goes to charity (20%)?

but, this payment is only one time? but they can, for example, let pay out 1 million dollar each year?
or does they make each year a new calculation from the gross value?

 

[ivy]

thanks for that. so there are a few answers in it.

but i would like to make an example.
prince is 40, katherine is still alive. the estate gross value is 100 million dollars. the payment is every year.
the will says 20% of the gross value for the kids, katherine, and charity.
thats 20 million dollars. then pay the taxes,... i say 5 million dollars for this... thats 15 million.
the kids would get 6 million (40%, 2 million for each) and katherine also 6 million (40%), and 4 millon goes to charity (20%)?
but, this payment is only one time? but they can, for example, let pay out 1 million dollar each year?
or does they make each year a new calculation from the gross value?

there's a million things that are wrong with that example. when 40 they are getting principal not only income. Estate tax happens only once when the assets is transferred from one person to the beneficiaries. the 20% of the gross value is only for the charity not the kids and katherine. katherine doesn't get a lump sum. you have two payments to charity in your example and so on. again you are confusing yourself.


let me try something else. let's imagine that Michael had a really simple Estate. Let's assume he had only $200 Million in cash in his accounts.

Estate would be required to make a 20% of 200 M = $40 Million payment to charity.

Then they would be required to pay the Estate taxes on the remaining $160 Million. Let's say the Estate tax amount is 30% which is $48 Million.

Then the principal remaining would be $112 Million. This would be divided into two trusts $56 Million in kids name, $56 Million in Katherine's name.

Now imagine that this principal would bring $15 Million net income every year. Until kids are 21 they would get allowance and the remaining would be added to the principal. Assume that they (katherine and kids) were each given $1 M for yearly expenses and the rest is put the the principal (15 / 2 = 7.5 M , 7,5-3 = 4.5 M is added to the kids trust to make it $60.5 M , $6.5 M added to Katherine's trust principal). This will continue until each kids turn 21, so the addition of the unused money (if any) would increase the principal. (Trust says any undistributed income should be added to the principal)

Now imagine that Prince has turned 21. The net income is $15 M. He would either get $2.5 M (if Katherine is alive) or $5 M (if Katherine is dead) yearly.

Now imagine that Prince turns 30 and the principal of each trust has increased to $90 Million (from the original $56) due to adding the undistributed income to it and as this is 15 years later and given Katherine's age she'll probably be dead. So I'll assume her trust - let's say another $90 Million - is now added to the kids trust bringing the principal amount to $180 M.

Which makes each child's share of the principal $60 Million. So according to the trust Prince gets $20 Million when 30, another $20 M when 35 and another $20 Million when 40 years old.

Now again this is a really simplified cash only example. We don't know the Estate gross value, we don't know how the charity payments would be handled, we don't know tax amount. Also some principal assets - such as the catalogs - would probably not be liquidated and paid in cash, they would probably just get ownership shares in their name. In other words for example if Sony/ATV is worth $600 Million they wouldn't get it as $200 M in cash, they would get it as 1/3 of ownership of it.

 

[ivy]

So if the estate has $100m cash and is worth $1b

by applying the rules

charities get 20% of $1b = $200m.
but since the estate has only $100m cash, how are they going to pay out the charities.
and now if they use all the money to pay out the charities, they will still owe them $100m. Plus, there won't be anything left for taxes, as well as the Katherine trust or the kids trust.

I wonder how the executors are going to work this out.

Im not sure myself if the Estate pays to the charity fund what they are worth through their total assests. (Worth) I would think it would be calculated on income. Maybe Ivy can clarify how that works.

Actually Estate tax also known as the inheritance tax is the value of all the property interests of the decedent at the time of death. So yeah it can be pretty huge depending on the ownership structure of the assets. It can make the charity payment and Estate tax quire significant as well and it might require an ongoing payment. We just don't know it now. Most of the assets are listed at $1 nominal value. It's what makes it harder to answer some of these specific payment questions. We need to see the last accounting of the Estate, the one before they get out of the probate, to know it for certain. Right now those payment schedules is just a speculation. We need more information to know how it'll happen in the future.

 

[xthunderx2]

Thank you Ivy for this thread..it is very informative..

 

[Tygger]

Ivy, thank you for the thread and clarifying the documents. Do you feel these documents are worthy of such a complicated estate???

Other people of Michael's financial stature have pages of detailed direction after death. These documents are so basic and general that those of lesser means wouldn't accept it. Its ridiculous.

Thank you for cleaning the thread. There is no proof the family is after any money so I don't think comments like that are acceptable.

 

[mjchris]

there's a million things that are wrong with that example. when 40 they are getting principal not only income. Estate tax happens only once when the assets is transferred from one person to the beneficiaries. the 20% of the gross value is only for the charity not the kids and katherine. katherine doesn't get a lump sum. you have two payments to charity in your example and so on. again you are confusing yourself.


let me try something else. let's imagine that Michael had a really simple Estate. Let's assume he had only $200 Million in cash in his accounts.

Estate would be required to make a 20% of 200 M = $40 Million payment to charity.

Then they would be required to pay the Estate taxes on the remaining $160 Million. Let's say the Estate tax amount is 30% which is $48 Million.

Then the principal remaining would be $112 Million. This would be divided into two trusts $56 Million in kids name, $56 Million in Katherine's name.

Now imagine that this principal would bring $15 Million net income every year. Until kids are 21 they would get allowance and the remaining would be added to the principal. Assume that they (katherine and kids) were each given $1 M for yearly expenses and the rest is put the the principal (15 / 2 = 7.5 M , 7,5-3 = 4.5 M is added to the kids trust to make it $60.5 M , $6.5 M added to Katherine's trust principal). This will continue until each kids turn 21, so the addition of the unused money (if any) would increase the principal. (Trust says any undistributed income should be added to the principal)

Now imagine that Prince has turned 21. The net income is $15 M. He would either get $2.5 M (if Katherine is alive) or $5 M (if Katherine is dead) yearly.

Now imagine that Prince turns 30 and the principal of each trust has increased to $90 Million (from the original $56) due to adding the undistributed income to it and as this is 15 years later and given Katherine's age she'll probably be dead. So I'll assume her trust - let's say another $90 Million - is now added to the kids trust bringing the principal amount to $180 M.

Which makes each child's share of the principal $60 Million. So according to the trust Prince gets $20 Million when 30, another $20 M when 35 and another $20 Million when 40 years old.

Now again this is a really simplified cash only example. We don't know the Estate gross value, we don't know how the charity payments would be handled, we don't know tax amount. Also some principal assets - such as the catalogs - would probably not be liquidated and paid in cash, they would probably just get ownership shares in their name. In other words for example if Sony/ATV is worth $600 Million they wouldn't get it as $200 M in cash, they would get it as 1/3 of ownership of it.

cool example.

that is the gross value?

i don't understand what you mean with this. english is not my main language. interest? (thats what a translator tells me)
i thought the principal is the same like net income. whats then the difference?

you mean that prince would get 20 million when 30 (5 years 20 million, each year), 40 million when 35 and 60 million when 40?

 

[ivy]

that is the gross value?

gross value is the value before any deductions. In other words gross value is before any taxes and expenses taken out

i don't understand what you mean with this. english is not my main language. interest? (thats what a translator tells me)
i thought the principal is the same like net income. whats then the difference?

they aren't the same. For example if you have $1,000 in your bank account it would be principal. If that $1,000 has brought $50 due to interest what would be the income.

In Michael Jackson's case assets such as Mijac and Sony/ ATV catalog, Neverland and so on are the principal assets. The yearly earnings is the income. In other words MIJAC catalog would be the principal while the royalties it bring every year would be the income.

you mean that prince would get 20 million when 30 (5 years 20 million, each year), 40 million when 35 and 60 million when 40?

no. according to the trust the principal is divided into 3 payments at 30,35 and 40 years old. So if the principal that Prince supposed the get is $60 Million, it will be divided to 3 and he would be paid $20 M when 30, another $20 M when 35 and the final $20 M at 40 years old. It is 20 +20+20 = 60 Million.

 

[ivy]

Ivy, thank you for the thread and clarifying the documents. Do you feel these documents are worthy of such a complicated estate???

Other people of Michael's financial stature have pages of detailed direction after death. These documents are so basic and general that those of lesser means wouldn't accept it. Its ridiculous.

Thank you for cleaning the thread. There is no proof the family is after any money so I don't think comments like that are acceptable.

Actually one can argue that the the number of the assets Michael had could have made it harder for specific instructions. A normal person can go into details about 2-3 properties they had but it's unrealistic to expect Michael Jackson to go into specifics about over 30 companies he had at the time of his death. Plus knowing that the trust was first created at 1995 and updated over the years, it's obvious the goal was to be a catch all trust.

And honestly he's leaving everything he has to his kids and wants to take care of his mother when alive. The trust perfectly achieves that goal. I really do not know what more detailed direction is needed.

 

[Tygger]

Thanks Ivy. The Forbes article gave me pause when it compared his documents to others of his standing. These people have more specialized, detailed documents which prevents questions and covers various scenarios. I would have preferred to see Michael Jackson's estate with similar detailed documents.

 

[Petrarose]

And honestly he's leaving everything he has to his kids and wants to take care of his mother when alive. The trust perfectly achieves that goal. I really do not know what more detailed direction is needed.

Ivy I agree. I see by the question that some are influenced by some experts on tv or in papers who were saying that most people with Michael's wealth have more detailed trusts. In other words, Michael should have a detailed trust, because those OTHER people have detailed trusts. We need to stress that as long as Michael's trust accomplishes its goal, then it is adequate for Michael Jackson.

Further, how can anyone say they would like to see Michael "with a similar detailed document." Michael did not leave any money to us. The estate exec are not confused about what to do. They understand the trust and know how to act.

On another issue, I don't want to be rude, but are some people making this thread more complicated than it should be? Are people bringing in complicated scenarios and mathematical equations to confuse the issues?

 

[ivy]

On another issue, I don't want to be rude, but are some people making this thread more complicated than it should be? Are people bringing in complicated scenarios and mathematical equations to confuse the issues?

Yes as I said it's impossible to calculate a payment schedule with the information we have now. So it kinda went off topic and became too much speculation and more confusing than it should be in my opinion.

My point was simple. It's false when some people claim that Michael's kids will not get anything until they are 30. They will start getting income starting they are 21 years old. Trust also allows for earlier and speed up payments for things such as buying a house, starting a family , business and so on.

 

[Tygger]

Ivy I agree. I see by the question that some are influenced by some experts on tv or in papers who were saying that most people with Michael's wealth have more detailed trusts. In other words, Michael should have a detailed trust, because those OTHER people have detailed trusts. We need to stress that as long as Michael's trust accomplishes its goal, then it is adequate for Michael Jackson.

Further, how can anyone say they would like to see Michael "with a similar detailed document." Michael did not leave any money to us. The estate exec are not confused about what to do. They understand the trust and know how to act.

He deserves the best and I'm not certain that happened with these documents compared to others. I gave my opinion. That's all.

 

[mjchris]

Yes as I said it's impossible to calculate a payment schedule with the information we have now. So it kinda went off topic and became too much speculation and more confusing than it should be in my opinion.

My point was simple. It's false when some people claim that Michael's kids will not get anything until they are 30. They will start getting income starting they are 21 years old. Trust also allows for earlier and speed up payments for things such as buying a house, starting a family , business and so on.

Ivy I agree. I see by the question that some are influenced by some experts on tv or in papers who were saying that most people with Michael's wealth have more detailed trusts. In other words, Michael should have a detailed trust, because those OTHER people have detailed trusts. We need to stress that as long as Michael's trust accomplishes its goal, then it is adequate for Michael Jackson.

Further, how can anyone say they would like to see Michael "with a similar detailed document." Michael did not leave any money to us. The estate exec are not confused about what to do. They understand the trust and know how to act.

On another issue, I don't want to be rude, but are some people making this thread more complicated than it should be? Are people bringing in complicated scenarios and mathematical equations to confuse the issues?

when people asking if that is correct or this,... that is not making it complicated. its making it clear, to understand how this works.
and thats what ivy and i did. i asked and she gave me the answers. not all answers, but the most important. thats it.

 

[Petrarose]

He deserves the best and I'm not certain that happened with these documents compared to others. I gave my opinion. That's all.

There you go again with this "OTHER" people^^. But how do you know he did not get the best for what HE wanted done. You read a paper and saw this information about what OTHER people do. What is best for others may not be the best for you, me, Michael. The point is that what Michael wanted done with his estate is being done. He wanted to care for his Mother until death, and his children and charity, and that is being done superbly. The only people making messes are those who are not part of the will. The people from the paper who critique Michael's trust, are simply stating their views. It does not mean what they say is the gospel. Further, we all know a man who like to be individualistic and do his own thing in spite of stigmatization by the big OTHER.

Look at what Michael has done in Michael's context, and not within the context of OTHERS. Those who insists that individuals follow the drum of others cause many individuals to be suppressed, so let Michael do what he wants to do for once. Have we reached the point now when even the man's trust is criticized? Why should he make a complicated trust to serve a goal, when a simpler trust will serve the same goal? It is like people who make long speeches, and the whole thing can be summed up in one sentence. The idea that Michael needs a more detailed trust because people with money have them is a misconceptions within Michael's context, since Michael's trust is doing what Michael wanted it to achieve.

Chris I understand you ^^. However Ivy said what the thread was about. When we add numbers in and try to calculate what XYZ will get, we are bringing an element into the discussion which could lead to errors because we cannot foresee the Gross numbers in the future. Ivy, as she stated, wants to clear up in a general way how the trust works, how the money is dolled out at specific ages/situations, etc. She wants people to add questions about the trust. Then, you tell her she does not even understand because she was pointing this out to you. I want this thread to remain because since 09 when Ivy explained the trust, people still keep saying a lot of strange things, so let's keep the thread free of math calculations. This is not a thread where we add up every ones money.

 

[bluetopez]

MJs Will/Trust is what he wanted them to be. So are u saying he didn't give himself the best? That is odd to say!

 

[Tygger]

I have read other wills/trusts from other high net-worth individuals on my own after reading the Forbes article. THAT is how my opinion was formed.

MJ did not write his own will or trust. I'm not sure who wrote it but, IMO it would have served him better to have another party review the documents and give a professional opinion. Nothing wrong with that.

 

[bluetopez]

But, this isn't the first Will MJ had. So I would assume the last Will and the others were read back to him by those involved and he still agreed.

 

[Tygger]

Wasn't this also a Forbes article that suggested he had several wills? Again, if he did indeed have and review several wills then, he had several chances to have someone else review them as well in my view.

 

[bluetopez]

Yes, it was Forbes I believe. And if it's true what they say, I then feel this is what he wanted then? After all the money will go to his kids in the end. Isn't that what matters here?

 

[ivy]

I have read other wills/trusts from other high net-worth individuals on my own after reading the Forbes article. THAT is how my opinion was formed.

MJ did not write his own will or trust. I'm not sure who wrote it but, IMO it would have served him better to have another party review the documents and give a professional opinion. Nothing wrong with that.

I do want to add a little bit to this.

Some people criticize that Michael's will is too short but in reality is that his will is a "pour over will" which only has the purpose to transfer the assets to his trust. It makes the trust document the main document and pour over wills tend to be shorter.

Michael's trust has started in 1995 and it seems to be designed to be general and do not need long updates each time around. If you know how to read it , the trust also gives a lot of detail about how the assets should be managed. For example it tells you whichy type of charity (childrens), what will be paid for Katherine and what won't be, a payment plan for the kids share, an exception plan to allow early payment, a provision to scan for business scam acts aimed towards the kids, limiting the sales of the assets to only unprofitable ones or to cover debts, providing a guideline to executors, defining the future executors and even planning for if there's no executors left.

It's also important to remind that multiple main assets of Michael are managed by other trusts - Sony/ATV and Mijac- and multiple assets are a part of LLCs - Neverland. Those trusts and company bylaws that haven't become public might hold detailed instructions about those assets.

In other words you might be disappointed and believe Michael's will and trust do not have many specific provisions for his catalogs for example but those specific instructions might be placed at New Horizon I, II , III trusts. So rather than having a trust with hundreds of pages , they might have opted to have multiple smaller sized trusts.

Don't forget that we don't have all the information.

 

[Petrarose]

^^Thanks Ivy. Let's hope this helps.

 

[Tygger]

I read the will/trust that was made public. They are very basic and straightforward documents that I had no problem understanding. I've never said the will/trust was too short. I don't believe either to be detailed or specific enough IMO considering MJ's financials. That's all.

Although these documents could have been fine for MJ and those in his employ, it would not be something I would advise him to sign without another party reviewing them.

Ivy, thank you for mentioning there might be other more detailed, specific documents in place. I can only hope these documents exist and that they benefit his beneficiaries.

I agree with you that we don't have all of the information but, thanks for trying to explain the information we do have.

 

[Bonnie Blue]

Although these documents could have been fine for MJ and those in his employ, it would not be something I would advise him to sign without another party reviewing them.

I can only hope these documents exist and that they benefit his beneficiaries.

I agree with you that we don't have all of the information.

And why should the public be party to mj's private trust documents? As far as i understand it trusts are private which is just one of the reasons the rich and famous use them. If you look for mj's trust online, you can find it with a great big watermark of news of the world on it. That's because, like everything else mj, it was sold to the tabs, prob by oxman, and so that's why it's ended up poured over, scrutinized, criticised and called 'ridiculous' by people. I'm sure when mj was having his trust drawn up, what fans' preferences might be was not a major concern for him.