We are remembering the times of Michael Jackson when he dazzled us with the moonwalk, when he sang Billy Jean and performed the monster walk in Thriller.  Now the thrill of a genius comes to the forefront as his financial empire is questioned.  For years we had heard that Michael Jackson was broke.  That he lived lavishly and spent all his money in expensive hotels.  But each day the headlines beam and the commentators roar a different story.  We are realizing that Michael was not broke after all.  In fact, some stories say that he is worth more dead than alive.  In 1985 Michael made a stunning move when he paid $47.5 million to buy the music publishing catalog that includes 250 Beatles songs and hundreds of thousand of other works.  Today the catalog is valued between $1.5 billion and $2 billion.  Since his shocking death, financial analysts have calculated that Michael Jackson’s assets were worth at least $200 million more than his debts.  Not to mention the surge of fans buying and downloading his music that will increase the value of his estate.

 Michael’s finances peak the interest for business owners small and large, because it started with a sour rumor that Mike was broke.  That he did not have enough money to cover his debts.  That type of storytelling will provoke nightmares to a business owner because that means his business is insolvent.  (The condition of being unable to pay debts as they fall due.)  But the light begins to shine as more stories reveal that Michael had a Will, maybe two, and may have shielded some of his estate from creditors ensuring that his children will be taken care of by placing a life insurance policy and other assets in an irrevocable trust.  An irrevocable life insurance trust may be concerned with wealth generated after death.  One of the main reasons for having a life insurance trust is estate tax considerations. If an ILIT is properly structured, the death benefits paid to the trust will not be included with the estate of the insured, which is a good thing. 

Micheal had other estate planning choices, such a Business Trust,  an Irrevocable Trust, a basic life insurance policy, a Will, a business irrevocable life insurance trust (BILIT) which is very complex.  As a business owner you should make yourself aware of all the options available and speak with a business attorney to advise you properly.  Some trusts have tax rates, and distribution requirements.  Some trusts are set up specifically to legally avoid taxes and to avoid the delay of probate proceedings.  You, as the business owner will set the rules within the specific trust guidelines.

Michael Jackson was a genius and not just in talent.  Word on the street says he was a perfectionist and his business affairs are worldwide.  It can take at least 30 days or more before the contents of Michael Jackson’s Will is released.  Let’s not sit back to see if Michael did the right thing.  Take a look at your estate plans and ask yourself, does your business have enough cash to cover your debts?  How will your family tell your story?  Or, will they be too broke to talk about it?  Is it time to make a change?  Remember, you are not alone.  A business attorney is here with you.  Seek one out today.

 Do you have a legal question? We offer free consultations regarding this and others legal issues.  Call today or chat online, privately, with an attorney every Monday through Friday from 8 a.m. to 8 p.m. at www.mckeeoffice.com