The date is July 3, 2009 and yesterday the Will of Michael Jackson ("Michael"), was filed in Los Angles County Superior Court.   My phone and email have been ringing off the hook.  The most common question I've been getting is: "won't the Will tell who inherits Michael's assets?"  Now that Michael's Will has actually been filed and made public, we now know the answer . . . No.  As you will see, the common sense simple question of "why doesn't Michael's Will tell us who gets all his money?" is really not that simple at all.

      The law works like this.  When one dies, their assets can either be in "their name" or in the name of a Living Trust.  Most Californians who plan properly, as did Michael, prepare a Living Trust during their lives to expedite the process of giving away their assets at death.

      At the moment of your death, the court freezes all assets in "your name."  These frozen assets in "your name" (note the emphasis on "your name") are then transferred down to the Probate Court, and a court proceeding called "Probate" begins.  Most people try to avoid Probate because it takes too long, costs too much, and is too public!

Probate take too long because it takes at least one year to finish, often times more.  The purpose of Probate is to allow the Court to become involved in and referee the process of collecting all assets in "your name," paying off your creditors, and then giving away your net assets to the people indicated in your Will.  Accordingly, if you die with assets in "your name," at the moment of your death those assets will be frozen, marched down to the Probate Court, and a one year or more legal proceeding will start wherein the Court collects your assets, pays off your creditors, and then gives everything away according to your Will.  Noteworthy here is that a Will doesn't get you "out" of Probate, a Will simply ensures that at the "end" of the year, or more, long Probate proceeding, your net assets are given away to the correct people.  So one reason why people hate Probate is because it takes too long.

Probate also costs too much.  Probate fees are mandated by law and are a percentage of the gross value of your estate.  Yes, I said GROSS.  So if someone dies owning a $1.0M market value house, the Probate Court fees are calculated on $1.0M.  It does not matter that the decedent bought the house the day before he died with no money down!  It is still a $1.0M house!  Here are some examples of Probate Court fees: estate of $1.0M pays $50,000 in fees; estate of $350,000 pays $20,000 in fees.  This is all money that should be going to the kids!  So another reason why people hate Probate is because it simply costs way too much. 

Lastly, Probate is a public process.  A decedent's Will must be lodged with the Court within 30 days of death.  This is why Michael's attorneys lodged his Will today in Los Angeles Superior Court.  Significant here is that all Court records are public!  As of the time of this writing, Michael's Will has only been on file with the Court for 8 hours, and yet every news agency in American, and probably internationally for that matter, has been downloading it from the Court website and posting it on the internet.  By making Court records public, the entire world has internet access to the details of your wealth and who you plan to give it to.

So then why doesn't Michael's Will tell us all the juicy details of where his money will go?  Like most Americans, Michael wanted to avoid the Probate process altogether.  He did this the same way most people do, he set up a Living Trust.  A Living Trust looks just like a Will, it says "whatever is in this trust on the date of my death, give it all to so and so."  If you set up a Living Trust while you are alive and move all assets in to the Living Trust during your life, at your death, there will be no assets in "your name;" they'll be in your trust's name.  Since trust assets are not subject to Probate, there will be no Probate process to have to deal with.  Remember, Probate only applies to assets in "your name" not assets in "your trust's name."  The process of giving away trust assets happens outside of Probate, without government involvement, and is generally very fast, cheap, simple, and most importantly for Michael . . . Private!  My office routinely gives away trust assets in 90 days. 

When you get your Living Trust done, the attorney usually also gives you something called a Pour Over Will.  All this Pour Over Will does is say "if I accidentally leave anything in 'my name' as compared to the name of my trust, then allow that single asset to be Probated and at the end of the Probate process give it to my Living Trust."  Thus, it is said that the one Probated item "pours over" into the Living Trust like a pitcher of water.  Then, the master distribution scheme within the Living Trust privately gives everything away according to your wishes.

Michael has a Pour Over Will which gives everything to his Living Trust and that's what was recorded in Court today.  What the Living Trust says we'll never know unless someone leaks it to the press.  So back to our initial question . . . why doesn't Michael's Will tell us where his money goes?  The answer is because he properly planned his estate using an attorney drafted Living Trust.  During his life, he took all assets out of "his name" and transferred them to the Living Trust.  This rendered the Will and Probate pointless because there were no assets in "his name."  Further, any assets accidentally left in his name would just "pour over" (be given) to the Living Trust.  Oh well, there's still the Enquirer!

by Jason Louie, Attorney at Law, For more information , you call call 1-800-734-4021, press extension 1700.

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