Michael Jackson's Estate: An Update
Today's Wall Street Journal has an interesting article (here) entitled "Jackson Estate Steers to Next Crisis." There are a few points here, some of which relate to most probate estates and some of which are specific to Mr. Jackson's estate.
The rich and famous are just like everyone else in the sense that their bills have to be paid. Mr. Jackson had a LOT of outstanding obligations at the time of his death -- many of them large, but some of them relatively small (like an AT&T bill in the amount of $1,300). His co-executors are doing exactly what co-executors should do: use estate assets to pay off his debts (and to pay ongoing expenses of administration).
Here's an uncomfortable but true statement from the article: "Mr. Jackson's absence from the equation has eliminated the chaos and out-of-control spending that reigned during his life." Estate and trust administration appeals to me because it's very orderly. You have assets and you have bills -- you then use the assets to pay the bills. If the assets are insufficient to do so, there's even a mechanism (similar to bankruptcy) by which creditors are placed in order to get paid. The co-executors here are obviously operating on a much grander scale (at present, trying to figure out how to pay back or refinance a $300 million loan due at the end of this year), but the issue is pretty much the same one you'd see in more typical estates.
There certainly are new expenses caused by death (funeral expenses, expenses for lawyers and accountants, etc.), but those should be easy to get a handle on. The main problem with Mr. Jackson's finances was Mr. Jackson (or, more specifically, his inability to live on a budget). That problem died with Mr. Jackson. Also, my impression is that Mr. Jackson gave a LOT of money to various family members -- the co-executors certainly aren't going to continue that practice unless ordered to by a court (sorry, Tito).
One thing that isn't typical here: Mr. Jackson's co-executors "are aggressively managing Mr. Jackson's affairs as a going concern." That's as it should be, but it's fairly unprecedented. There was interest in Mr. Jackson's work before his death, and that interest has ballooned since his passing. The co-executors have a lot of experience in the music industry, and are in a great position to maximize the value of Mr. Jackson's assets. But I'll be curious to see how the estate is eventually wound up. Will the assets simply be turned over to a company run by or for the beneficiaries?
