Wills, Trusts & Estates Prof Blog

Terms of Michael Jackson's Alleged Will Revealed

Here is some of the most currently reported information about Michael Jackson's alleged will:

• Prepared in 2002.

• Drafted by John Branca (an entertainment lawyer who Michael hired from 1980 to 2006 and rehired again earlier this month).

• Primary beneficiaries are his mother (Katherine) and his three children.

• A portion of his estate will also pass to various charities.

• His father, Joe Jackson, is not named as a beneficiary.

• The named executors are John Branca and John McClain.

• The will may be filed as early as July 2, 2009.

See Nick Allen, Michael Jackson's father Joe 'not named in will', Telegraph.co.uk, June 30, 2009 and Ethan Smith, Jackson Will From 2002 In Spotlight, Wall St. J., June 30, 2009.

Special thanks to the legion of faithful readers who are keeping me posted on the developments of this case which will provide us with months and perhaps years of "enjoyment."

Charitable Giving Techniques CLE

The ABA Section of Taxation and the ABA Section of Real Property, Trust & Estate Law are co-sponsoring a live course andcorresponding live video webcast CLE entitled Charitable Giving Techniques on July 9-10 in Seattle, WA.

A description of the program is below:

This annual course of study, taught by a small faculty of experienced practitioners, a professor, and a university financial officer, presents a comprehensive review of charitable giving techniques, both lifetime and testamentary, with full discussion of recent statutory provisions. Comprising more than 13 hours of instruction, it addresses the technical, mechanical, and legal sides of the issues, while also providing registrants with practical applications, pointing out common pitfalls, and offering “tips from the trenches.” Topics include:

• Charitable remainder trusts, charitable lead trusts, and pooled income trusts
• Property contributions and non-trust giving techniques
• Gift annuities
• Use of private foundations, donor-advised funds, and supporting organizations
• Post-mortem charitable planning
• Charitable giving tax pitfalls

A full hour is devoted to consideration of particular ethical dilemmas faced by attorneys practicing in this area. Time is reserved throughout the program to address registrants’ questions

Michael Jackson -- Will or No Will?

The debate rages whether Michael Jackson died intestate or testate.

In Michael Jackson's Estate in Court, myjoyonline.com, June 29, 2009, it is reported that Michael's parents, Joe and Katherine Jackson, claim in their probate filing that Michael died intestate.

However, in Michael Jackson's Will Surfaces, TMZ.com, June 29, 2009, it is reported that Michael Jackson's attorney, John Branca, is in possession of MJ's will and that he intends to file it with the court.

Fiduciary Duties in Canada

Robert Flannigan (Professor, University of Saskatchewan College of Law) has recently posted on SSRN his article entitled Fiduciary Accountability Transferred, 35 Advocs. Quarterly 334 (2009).

Here is the abstract of his article:

The Supreme Court of Canada has toyed with the boundaries of fiduciary accountability for three decades. Some of the criteria it has advanced to identify when fact-based accountability will arise (e.g. vulnerability, power differential, reasonable expectation) are vague notions that potentially derail the conventional function of the jurisdiction. Specifically, the criteria may be taken to support the view that fiduciary accountabilityregulates the merits or fairness of the actions of fiduciaries. In BCE Inc. v. 1976 Debentureholders, the court now appears to have explicitly adopted that view, albeit without recourse to any of the criteria it had previously identified. It also appears to have compromised the strict operation of the conventional regulation. The decision represents yet another novel turn, and a radical one, in the court's mercurial intercourse with fiduciary accountability.

Dead But Still on the Payroll

Deceased city employees in Cincinatti may continue to receive retirement checks well after their death.  A recent Cincinatti.com article reports that poor managment of the system has resulted in investigations in at least 18 cases of payments to dead people, including the following:

A city retiree on a disability pension since the late 1970s who died in March 2000, but continued to receive monthly checks until June 2005, resulting in a $41,345 overpayment by the city.

A deceased city employee's beneficiary who died in March 2006, but received $18,067 in improper payments through July 2008.

Another beneficiary who received checks for 19 months after her December 2006 death, four of which - totaling $5,034 - apparently were cashed by her guardian. In addition to examining the precise details about the cashed checks, investigators have concluded that the city needs to collect and stop payment on checks totaling $19,696.

In one case, pension checks for a retiree who died in October 2007 continued to go to his spouse through June 2008. The following month, after her husband's name showed up on a death report, she began receiving a reduced pension - even though she had died two months earlier.

Barry M. Horstman, Dead city worker kept getting check, Cincinatti.com, June 8, 2009.

Hard Times are Hard on Everyone, Even the Super-Rich

The newest World Wealth Report, which is produced by Merrill Lynch and Capgemini, shows that the current financial crunch has impacted the wealthy as well as those living paycheck to paycheck. The number of "ultra high net worth individuals," those with at least $30 million to invest, decreased by almost 15% last year.  The number of "high net worth individuals," those worth $1 million without their home, decreased by 15 percent.

Whether the super-rich are experiencing "hard times" is debatable, but they have been affected by the general economic downturn.

See Megan Murphy, Credit crunch takes toll on super-rich, Fin. Times, June 24, 2009.

Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.

Implied requirement of good faith allows beneficiaries to recover

A prenuptial agreement provided that if the husband died first, wife would maintain a valid will giving not less than one-quarter of her entire estate to each of her husband’s three sons. The husband’s will left a substantial portion of his estate to his wife.

After the husband’s death, his wife made transfers to irrevocable trusts which greatly reduced her probate estate. Her will left her probate estate to husband’s sons.

After the wife died, his sons sued and the Supreme Court of Kansas upheld the imposition of a constructive trust in their favor. The confidential relationship between the husband and his wife gave rise to an implied duty in the wife not to make gifts inconsistent with her obligations under the agreement. The nonclaim statute does not bar what is in essence an action by the wife’s estate to marshal assets nor is the action barred by the statute of limitations because the right of action did not accrue until the wife’s death.

Estate of Draper v. Bank of America, N.A., 205 P.3d 698 (Kan. 2009).

Top SSRN Downloads

Here are the top downloads from April 29, 2009 to June 28, 2009 from the SSRN Journal of Wills, Trusts, & Estates Law for all papers announced in the last 60 days.

Rank	Downloads	Paper Title
1	285	How the Rich Stay Rich: Using a Family Trust Company to Secure a Family Fortune Iris Goodwin, University of Tennessee, Knoxville - College of Law, Date posted to database: April 24, 2009 Last Revised: June 25, 2009
2	111	Copyright's Hidden Assumption: A Critical Analysis of the Foundations of Descendible Copyright Deven R. Desai, Thomas Jefferson School of Law, Date posted to database: April 27, 2009 Last Revised: April 27, 2009
3	108	What is a Trust? Mark Leeming, University of Sydney - Faculty of Law, Date posted to database: April 16, 2009 Last Revised: April 16, 2009
4	76	The Uniform Power of Attorney Act: New Solutions to Old Problems Gerry W. Beyer, Texas Tech University School of Law, Date posted to database: May 2, 2009 Last Revised: May 26, 2009
5	64	The Fiduciary Duty of Departing Employees Robert Flannigan, University of Saskatchewan, Date posted to database: April 16, 2009 Last Revised: June 4, 2009
6	59	Review of Federal Income Taxation of Estates and Beneficiaries Ronald H. Jensen, Pace University School of Law, Date posted to database: April 16, 2009 Last Revised: April 16, 2009
7	51	Fiduciary Accountability Transformed Robert Flannigan, University of Saskatchewan, Date posted to database: May 18, 2009 Last Revised: May 18, 2009
8	45	Post-Mortem Sperm Retrieval and the Social Security Administration: How Modern Reproductive Technology Makes Strange Bedfellows Mary F. Radford, Georgia State University - College of Law, Date posted to database: April 13, 2009 Last Revised: April 28, 2009
9	44	Codification of Late Roman Inheritance Law: Fideicommissa and the Theodosian Code Joshua C. Tate, Southern Methodist University - Dedman School of Law, Date posted to database: April 11, 2008 Last Revised: February 11, 2009
10	28	Negron: Circuits Now Split 2-2 Wendy C. Gerzog, University of Baltimore - School of Law, Date posted to database: May 21, 2009 Last Revised: May 21, 2009

The right of publicity and Michael Jackson's Estate

 The following discussion is reproduced with permission from Bridget Crawford, Estate Tax Disaster Looms for Michael Jackson’s Estate, Feminist Law Professors, June 27, 2009:

The right of publicity is descendible in California.  This means that a person may transfer by will the right to exploit his or her name, likeness, image, etc., just as one might transfer, say, an heirloom piece of jewelry.

In Postmortem Rights of Publicity: The Federal Estate Tax Consequences of New State-Law Property Rights, published in the Yale Pocket Part,  I have argued, together with Mitchell Gans and Jonathan Blattmachr, that a descendible right of publicity likely is included in a decedent’s gross estate for federal estate tax purposes. In the Jackson estate, the estate tax value of Mr. Jackson’s rights of publicity very easily could exceed his estate’s liquid assets available to pay taxes.

In short: big estate tax problems loom on the horizon for Mr. Jackson’s estate.

Article Examines Succession Without Administration

Karen J. Sneddon (Assistant Professor, Mercer University School of Law) has recently published her article entitled Beyond the Personal Representative: The Potential of Succession Without Administration, 50 S.Tex. L. Rev. 449 (2009). 

Below is the abstract from the article: 

The baby-boom generation has changed a number of institutions, such as schools, and has challenged a number of assumptions. As the baby-boom generation ages, one such institution that may be changed is the probate court, a court that handles estates. A revived Succession without Administration could facilitate the efficient and effective transfer of estates. To complement the Uniform Probate Code's already “Flexible System of Administration of Decedents' Estates,” the Uniform Probate Code was amended in 1983 to include Succession without Administration. Succession without Administration provides for administration free from court supervision that is not restricted to the size of a decedent's estate and a spreading of estate management beyond the personal representative. That means that solvent estates with relatively liquid assets and agreement among beneficiaries could benefit from this alternative. It could promote the goal of family harmony.

 

Despite being viewed by its primary draftsperson as a natural progression of minimal court supervision and buttressed by the identification of such a need in the 1940s, no jurisdiction has adopted the Succession without Administration provisions. In 2007, the provisions were declared “obsolete” and officially “withdrawn from recommendation for enactment.”

 

First, this Article briefly considers the origins, functions, and problems of administration. Second, this Article surveys statutes featuring informal administration procedures that stop short of the expansive options of the Uniform Probate Code's Succession without Administration, including one procedure that has been in use since the late nineteenth century. Third, this Article analyzes the options in the Uniform Probate Code to minimize court supervision. In addition to analyzing Succession without Administration, this Article reviews procedures inherent, affidavit procedures, and summary procedures for small estates. Finally, this Article reasons that the overlooked Uniform Probate Code's Succession without Administration should be reconsidered by jurisdictions. It ensures the greatest number of options for the settlement of estates, including large solvent estates with liquid assets. Succession without Administration would also allow the spreading of authority to handle and manage the estate, which, in some cases, may preserve family harmony.
 

Jackson's Estate: Major Debt and A Major Asset

At this point, little is known about Michael Jackson's estate plan or will, but this is what is known:

• Heirs include three children, well-known siblings, and his parents.
• Jackson was plagued with large debts and multiple lawsuits seeking to recover back debts
• Last year Jackson sold Neverland Ranch for $22 million to pay back debts.
• Jackson's creditors and heirs will likely fight for their piece of his biggest asset: his 50% ownership interest in the Sony/ATV music catalog.
• The music catalog owns the publishing rights to thousands of songs and Jackson's half is valued at up to $500 million.
• Jackson's hit songs are also owned by his estate.

See Christopher Palmeri, Settling Jackson's Estate May Be a Thriller, Business Week, June 25, 2009; see also TaxProf Blog.

Special thanks to Christina Tippit (JD, Texas Tech University 2009) for bringing this article to my attention.

Estate of Third Wife of Drew Peterson Reopened

An Illinois Appellate Court recently upheld reopening the estate of a deceased ex-spouse of Drew Peterson.

At the time of Kathleen Savio's supposedly accidental drowning death in 2004, the final order in her divorce from Drew Peterson was pending.  A hand written will named James Carrol, the uncle of Peterson, as the executor of her estate and left all of her property to Peterson.  As executor, Carrol fired Savio's divorce attorney, appeared in the divorce pro se, and turned most of Savio's property over to Peterson. Carrol was discharged by the court upon completion of his duties and the estate was closed in 2006.

In March of 2008 Savio's father and siblings filed a petition to reopen the estate and remove Carrol as executor due to new evidence from Savio's exhumed body showing that her death was probably a homicide.  The petition claimed that a wrongful death claim against Peterson and Carrol's poor performance as an executor supported their request.  The trial court agreed and appointed Savio's father as the new executor.

The appellate court affirmed because the manifest weight of evidence supported the trial court's holding.  First, the court held that the estate could be reopened because the wrongful death claim was a newly discovered asset of Savio's estate under the state's Wrongful Death Act.  Under Illinois law, a newly discovered asset is one ground for reopening an closed estate.  Second, the court held that Carrol's removal was justified because his actions in Savio's divorce case were contrary to the best interests of the estate and its beneficiaries.  Finally, although Savio's children were next in line to be appointed executor under Illinois law, the appellate court felt that a court would not likely allow the minor children's guardian, Peterson, to be appointed as executor.  Since Savio's father was the proper choice after the children, the court upheld the appointment.

In re Estate of Savio, No. 04-P-118 (Ill. App. Ct. 3d Dist. Feb. 4, 2009).

Drew Peterson has since been charged with the death of Kathleen Savio. See AP, National Briefing: Midwest; Illinois: Ex-Officer Charged in Wife's Death, NY Times, May 8, 2009.

Thanks to James Krupp (Attorney, Krupp & Krupp, LLP, DeKalb, IL) for bringing this case to my attention.  

Jackson's 'This Is It' Tour

Michael Jackson was slated to perform a 50-run show entitled This Is It in London beginning July 13th.  Now AEG, the concert promoter, will have to figure out how to refund more than $85 million in ticket sales and recover at least $20 million spent on production costs, which does not includes a $10 million advance already paid to Jackson. A Billboard article summarizes the problem nicely:

For AEG, "it's either horrible or really horrible," a concert business executive says.

[A] source familiar with the situation says a traditional nonappearance policy was never written. Billboard couldn't confirm that at press time. Even if AEG had a policy, that doesn't mean Jackson's death, and the losses incurred, would be covered. "If it was a pre-existing condition or drug- or alcohol-related, a normal cancellation policy would not cover that, even if he had passed a medical exam," the source says. AEG could be on the hook "if death was from something that's excluded in the policy."

Ultimately, AEG may have to file a claim against Jackson's estate. And since Jackson has hundreds of millions of dollars of debt, and a couple of multimillion-dollar lawsuits pending, the worth of that estate is very much in doubt.

Ray Waddell, Fortune at Stake on Michael Jackson London Concerts, Billboard, June 25, 2009.

The website promoting Jackson's tour says refund procedures will be released early next week.  See michaeljacksonlive.com.

The Ramifications of Post-Mortem Sperm Retrieval

Mary F. Radford (Professor of Law, Georgia State University College of Law) has recently posted on SSRN her article entitled Post-Mortem Sperm Retrieval and the Social Security Administration: How Modern Reproductive Technology Makes Strange Bedfellows.

Here is an abstract of the article:

This article was prepared in conjunction with the Thurgood Marshall School of Law March, 2009 symposium on "Emerging Issues in Estate Planning, Probate & Trust Law." The article examines a relatively new assisted reproduction technique through which the sperm of a man who has recently died is retrieved after his death, cryopreserved, and then later used by a woman (spouse, partner, or other) to produce a child. While much has been written about posthumously-conceived children (children conceived from sperm that were banked by the father while he was alive), there has to date been little examination of the ramifications of post-mortem sperm retrieval. The article explores whether children who are born through use of this technique will be entitled to their father's property or governmental benefits as the father's surviving issue. The article examines in depth the arguments in Vernoff v. Astrue, a case that is currently under consideration by the federal Court of Appeals for the Ninth Circuit. The child who is the subject of this case is reportedly the first child who was born using posthumously-retrieved sperm. Her mother has sought Social Security benefits for the child, citing numerous other cases in which the Social Security Administration or the federal courts have granted such benefits to posthumously-conceived children. The article explains how the interaction among state parentage law, state probate law, and the Social Security Act will be used by the court to make a determination in this and subsequent cases.   

Oral contract barred by statute

Alaska Statute 13.12.514 (identical to UPC § 2-514) requires that all contracts to make a will or devise be in writing.

In its opinion in Cragle v. Gray, 206 P.3d 446 (Alaska 2009), the Alaska Supreme Court held that an oral agreement between a grandmother and her granddaughter providing that the grandmother would give her house to her granddaughter if the granddaughter cared for her for until her death was a succession contract and there void because not in writing.

Unclaimed Ashes Despite Next-of-Kin

I recently wrote about the change in traditional funeral and burial practices, due in part to the high cost of traditional practices.  For some, however, any burial or funeral costs too much.  As a result, one funeral home is storing the ashes of unclaimed bodies in a supply closet.  The families have been contacted but cannot afford the cost of cremation to retrieve the remains.

See P.J. Huffstutter, The unclaimed ashes of hard times, LA Times, Feb. 22, 2009

Financial Adviser 101

Here are some things to consider to protect yourself when picking a financial advisor:

1. The advisor's background: start with http://www.finra.org, http://www.adviserinfo.sec.gov/, www.cfp.net, and www.fpanet.org.

2. References from other clients: remember to rely more on references with similar investing goals.
3. The advisor's payment method: this could help you tell if the advisor is pushing something out of self-interest.
4. Checks and balances: is your investment going straight to the advisor or to a thrid-party custodian?
5. The advisor's track record: ask about specific situations and the combination of all clients the advisor handles
6. Get it in writing: whatever the agreement, spell it out!
7. Check with other professionals: what other professionals think about your advisor can be helpful.

 

See Shelly Banjo, Seven Questions to Ask When Picking a Financial Advisor, April 13, 2009.

Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.

Class Gifts in the the New Restatement of Property

Frederic S. Schwartz (Professor of Law, Oklahoma City University School of Law) has recently published The New Restatement of Property and Class Gifts: Losing Sight of the Testator's Intention, 22 Quinnipiac Prob. L.J. 221(2009).

The following are excerpts from the introduction to the article:

Division V of the new Restatement (Third) of Property: Wills and Other Donative Transfers will soon be published in final form. In addressing a very common issue, this part of the Restatement violates the most fundamental principle in the law of wills: that the testator's intention is paramount.

The issue is this: When a devise is made to a plurality of beneficiaries, some of whom predecease the testator, who is entitled to the subject matter of the devise? Does it pass entirely to the beneficiaries who survive the testator? Or do the shares that the predeceased beneficiaries would have taken had they survived pass to the residuary beneficiaries? The correct approach to this allocational issue (as I will call it) seems obvious enough: The court should determine which outcome the testator likely intended.

Yet, most of the courts (and now the Restatement) have endorsed a different approach, in which a gratuitous conceptualism interferes with the inquiry into the testator's intention. * * *

In Part I of this article, the correct (and non-conceptualist) resolution of the allocational issue will be described. Part II will show briefly how the courts have substantially endorsed the conceptualist method. Part III will describe and criticize the Restatement's treatment of the allocational issue and the afterborn issue.

Tainted Organ Transplants Lead to Litigation

More than 300,000 organ transplants have occurred in America since 1994, with fewer than 30 of these cases involving transmission of a disease not identified prior to transplant.  But in those few cases, there have been devastating results:

• In 2002, a man died of a rare brain cancer one year after receiving an organ from a donor who had the same cancer. 
• In 2006, A New Jersey man received a lung from a heavy smoker and was diagnosed with cancer a few months later.
• In 2007, five people contracted HIV from a donor with a history of high-risk sexual behavior.

• In 2007, several people died after receiving rabies-infected organs from the same donor.

The federal Uniform Anatomical Gift Act, which was designed to create informed consent, uniform laws, and protected donors, appears to provide immunity donor banks and donor who act in good faith.  This hasn't stopped the litigation, and a Massachusetts court recently held that the provision does not protect against common law tort actions based on decisions about organs suitable for transplant that are not made in good faith. 

The demand for organs leads some to conclude that the acceptable range for transplantable organs should be expanded with informed consent requirements being more stringent.

See Carmel Sileo, Tainted-organ transplants trigger legal action, immunity challenged, Trial, March 2009, at 16.

Basics of Trust Administration CLE

Planning For Estates is sponsoring a CLE a teleconference on July 16, 2009, entitled Basics of Trust Administration. 

Here is a description of the program:

This teleconference will provide an overview of basic principles of trust administration under U.S. law, including powers and duties of trustees; relations with beneficiaries; removal and replacement of trustees; the use of directed trustees, protectors and investment managers, etc., to 'slice and dice' trustee powers; probate court involvement in trust administration; and concepts in fiduciary accounting and income tax reporting. The materials and the speaker will focus on general concepts and principles shared by the laws in most U.S. states with an emphasis on the considerable deviations that written trust instruments can make from state law. The materials will provide citations to the Uniform Trust Code and to the laws of two non-UTC states (New York and Indiana) to illustrate each general principle or issue.

This teleconference will be a useful introduction to trust administration principles or a refresher course in those principles for professionals who will begin working or will work more with trusts, or who may be called upon to advise clients about the design and drafting of trusts and the selection of trustees.